Bank of Israel
Jerusalem, Oct 21 , 2015
Bank of Israel Companies Survey—Main Findings
Third quarter of 2015
The Companies Survey for the third quarter of 2015 reflects continued moderate
expansion of business sector activity, which is reflected in the weighted net
balance which remained near zero, similar to the previous two quarters (Figure
1 and Table 1). With that, there is variance between the major industries. The
net balance in the manufacturing industry is very negative, in the trade, services,
and transport and communications industries it indicates no change in the level
of activity, and in the construction and hotels industries, the net balance is
positive. The expectations for the next quarter reported by companies in the
current survey are more positive, and encompass the services, transportation
and communications, and construction industries, while expectations in the
manufacturing industry are for continued contraction.
Table 1: Economic activity in the principal industries, based on the net balance
of reported activity
(Original and seasonally adjusted data, percent)
Year
Quarter
2012
IV
Manufacturing (output)
*1
seasonally adjusted
Trade (sales)
seasonally adjusted
Construction (total activity)
*2
seasonally adjusted
seasonally adjusted
Hotels (total activity)***
Business services industries
seasonally adjusted
Total business sector
seasonally adjusted
2013
II
III
*2
12
*0
*9
IV
*-4 *1
*9
2014
II
III
IV
I
2015
II
III
*4
*-6
15
*2
*-5
-18
*0
*-2
17
*-1
*0
*6
*-9
-12
*-9 24 *10 *4
*5
-25 *-11 *-6 *-10 *-8
*4
*12
*-6
*6
-22
*-17
*1
25
*3
I
*11
*-18
Transport and communications (total activity)**
I
*-6
*1
*7 *19 *0 *21 *24 -26 -35
*0 *-11 *20
25
*9
*2
*13
*7
*6
*2
*18
*18
*35 *-1 *-7 *-5 *4
*8
*-5
*-8
*-2
-25
*-15
-34
*-5
*-7 -45 *20
*2
-44
*15
*-8
*-12
*17
35
*3
*-5
*0
*-2
*3
*-2
*28
-30
*25 *-8 *-18 *29 -33 74 -100 *-28 -57 -46
*36
*3
*0
*-6 12
*4
18
*6
*-3 -16
11
*1
*7
*-3
*-4
*-3
*7
11
12
*8
*-7
*-8
*5
*3
*3
*7
0
1
13
1
10
7
-5
-19
9
-2
1
-2
-2
2
10
6
7
6
-6
-15
6
-2
-1
4
* Not significant (at the 10% level).
** The significance test is less indicative in this industry due to the small number of firms.
*** Compared with the same quarter in the previous year.
The net balances of manufacturing industry output indicate a further decline in
activity in the third quarter of the year, which derived mainly from a decline in sales
to the domestic market and for exports. Likewise, the continued decline in the
utilization rate of equipment was joined in the third quarter by a decline in the number
of employees. The decline in activity encompasses large, mid-sized and small
companies, but mainly low technology manufacturing companies. Expectations in the
industry are for a further decline in domestic sales and a larger decline in exports in
the coming quarter.
In the services industry, the net balance of revenue reflects no change in activity, and
expectations are for a significant rise in overall activity and in orders for the next
quarter. The net balance of sales in the trade industry is also near zero, with mixed
expectations of growth in sales alongside a reduction in the number of employees in
the coming quarter.
In the construction industry, there was an increase in the net balance of volume of
activity, for the second consecutive quarter. In the third quarter, expansion of activity
was reflected both in construction of buildings and in infrastructure construction.
Land price constraints and a shortage of professional workers remained the most
serious constraints on increased activity. Expectations are for a further increase in
activity in the coming quarter.
The increase in activity in the hotels industry this quarter was significant compared
with the corresponding quarter of the previous year, reflecting recovery of the
industry compared with the period of Operation Protective Edge. The increase is
derived from an increase in the number of overnight stays by Israelis, alongside no
change in the number of overnight stays by tourists. Expectations are for a return to
the decline in reservations by tourists in the coming quarter, and the low volume of
tourists is the most serious constraint in the industry.
Sales of transport and communications services to Israelis remained stable,
alongside a decline in the sales of services to nonresidents. Expectations are for a
significant acceleration in activity in the coming quarter.
An assessment of supply and demand constraints indicates that demand constraints
remain the main limitation on conducting activity (excluding the construction
industry). With that, the shortage of professional workers is becoming more serious
in the construction, transportation and communications, and hotels industries.
Compared with the previous quarter, there was a significant easing of the severity of
the financing constraint in the business sector for small businesses, with a slight
increase for medium-sized businesses and large companies (Figure 3). The demand
constraints in all industries are not very severe, but past experience teaches that
changes in the severity of the constraints may be meaningful even when their level is
low.
In the third quarter of 2015, companies’ expectations of the inflation rate over the
coming 12 months declined to around 1.4 percent on average, compared with 1.6
percent in the previous quarter. The median expectation remained static, at 1.5
percent. About 72 percent of companies participating in the survey this quarter
expected that inflation over the coming 12 months will be within the target range
indicating price stability (1–3 percent). Expectations for the next quarter
regarding the exchange rate increased to NIS 3.91/$, compared with NIS 3.86/$ in
the previous quarter.
The findings of the Companies Survey for the second quarter of 2015 are based on the
responses of about 320 companies and businesses in various industries.
The survey’s questions are qualitative: Companies are asked to report the direction of
changes in various variables—increase, decline, or stability—and to note the strength
of the change—“great” or “slight”.
The Research Department adds that Companies Survey data are generally in line with
the trends of the macroeconomic data of the economy, and the findings’ advantage is
in being readily available and providing information rapidly, relative to other sources
of data.
Table 1.1: The net balance of manufacturing companies classified by humancapital intensity and innovation
(Original data, percent)
Year
Quarter
Advanced companies
Mixed companies
Traditional companies
2012
2013
2014
2015
IV
I
II
III
IV
I
II
III
IV
I
II
III
*-4
-18
19
*5
21
*7
*4
*-8
*9
*0
*4
*0
*9
*21
32
*23
*4
*16
25
*9
*5
*-9
*-19
*-18
*2
*12
*3
-17
-15
*8
*-3
*-9
22
*6
*-8
-29
Table 2: Statistical analysis of 12-month inflation expectations
Year
Quarter
1. Mode
2. Median
3. Average
4. Standard Deviation
5. Skewness*
Number of responding companies
2012
IV
I
II
2013
III
IV
I
II
2014
III
IV
I
2015
II
III
2.50
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
1.00
2.00
1.50
2.50
2.20
2.10
2.50
2.00
2.00
2.00
1.80
1.50
1.20
1.50
1.50
2.56
2.35
2.30
2.35
2.20
1.93
1.89
1.74
1.69
1.34
1.57
1.41
0.93
1.47
1.05
0.84
0.79
0.77
0.88
0.97
0.97
0.86
0.82
0.89
0.06
0.35
0.30
0.35
0.20
-0.07
-0.11
-0.26
-0.31
0.34
-0.43
-0.09
440
370
411
393
406
409
388
382
373
384
369
291
* Skewness is calculated as the difference between average and mode.
Table 3: Companies’ expectations for the NIS/$ exchange rate
At the time of the survey, the average exchange rate was NIS 3.88/$
Year
2012
2013
2014
Quarter
IV
I
II III IV
I
II III IV
One
quarter
ahead
Number of responding companies
Average
Standard Deviation
Number of responding companies
One year
Average
ahead
Standard Deviation
448
386
429 401
421 427
404
393 387
2015
I
II
III
406 388
292
3.89 3.75 3.69 3.65 3.56 3.54 3.51 3.68 3.95 4.01 3.86
3.9
0.13 0.13 0.1 0.13 0.11 0.17 0.13 0.22 0.23 0.21 0.26
0.1
445
292
380
426 400
420 420
401
391 381
405 381
3.98 3.87 3.79 3.76 3.64 3.64 3.6
3.74 4.02 4.11 3.93 3.98
0.35 0.29 0.16 0.26 0.24 0.23 0.2
0.26 0.29 0.34 0.3
0.16
Table 4: Manufacturing – net balances
Manufacturing Industries
2012
IV
I
2013
II
III
IV
I
2014
II
III
IV
I
2015
II
III
A. Activity in the quarter
1. Output
2. Sales
3. Domestic sales
4. Export
5. Stocks of raw materials
6. Stocks of finished goods
7. Rate of utilization of machinery and equipment
8. Number of employees
*1
*2
12
*-4
*1
*9
*4
*-6
15
*2
*-5
-18
*-3
*-5
17
*-8
*6
*1
*3
*-10
*5
*-10
-13
-21
*-3
*-7
12
*-9
*1
*-6
*-8
-11
*0
-12
-12
-17
*-8
*-6
*10
*-4
*2
*9
19
*-4
*2
*2
-13
-22
*2
*7
10
*8
*0
*8
15
9
*0
*3
*7
*-3
*3
10
*2
*3
*-3
*5
8
11
*6
*-3
*1
*-4
*-7
*-1
*4
*-7
*-8
*-4
*-1
*-6
*3
*-4
*-8
-18
*-2
*2
*-5
*-2
*-2
*0
*-4
*-7
*-3
*-2
*2
-13
9. Domestic orders
10. Export orders
-11
*-10
*-7
*-7
*-5
*-6
*-7
-10
*6
*-7
*0
*-10
*-3
*5
*2
*1
*-1
*7
*6
-16
*3
*3
*-8
-16
Number of responding companies
185
149
170
166
181
176
156
153
145
158
150
113
2014
II
III
IV
I
2015
II
III
B. Expected activity in the following quarter
Table 5: Trade – net balances
Trade
2012
IV
I
2013
II
III
IV
*11
*0
13
-7
*-7
*-9
24
*10
*4
*5
-25
*-11
*-6
*-10
*-8
*4
-16
14
*2
*-7
*7
24
*2
*0
*12
25
*6
*-8
*2
19
*-2
*4
*10
*10
*-3
-12
*-7
*11
*-4
*-7
*13
20
*2
*-4
*2
11
*0
*-4
*7
*9
*0
*2
*6
13
*-5
*-3
*-4
*8
*-2
*-6
*-8
*10
62
*-4
*18
57
*4
31
55
*-8
*18
51
*2
24
55
*-7
22
58
-11
*7
57
*-2
*9
55
*-4
23
53
*-7
*14
59
*-6
34
62
*-6
*12
51
2014
II
III
IV
I
2015
II
III
*0
I
A. Activity in the quarter
1. Sales
2. End-of-quarter stock
3. Percent of credit sales
4. Supply period
5. Number of employees
B. Expected activity in the following quarter
6. Forecast change in number of permanent employees
7. Sales expectations
Number of responding companies
Table 6: Construction – net balances
Construction
A. Activity in the quarter
1. Total activity
of which 2. Buildings
3. Infrastructure
4. Output prices in dollar terms
5. Area of building starts (sq. m.)
6. Area of building completions (sq. m.)
7. Building time
8. Number of employees
B. Expected activity in the following quarter
9. Expected activity in the following quarter
Number of responding companies
2012
IV
I
2013
II
III
*-18
*7
*19
*-20
*6
*19
*0
*0
*25
20
44
45
*-26
41
*-21
*12
IV
I
*0
*21
*24
-26
-35
*-11
*20
25
*-5
*10
29
*-9
-26
*-14 *-12
*20
*18
29
*7
*6
*-5
*-16 *-13 *-20
*0
31
30
37
48
39
*13
*19
28
40
35
*5
*0
*5
*-5
*-9
-27
*-10
*6
*15
*6
*0
*10
*0
*10
*-4
*-4
*0
*-11
*-5
*12
30
*0
*11
24
*15
*10
35
22
29
22
35
*12
*-10
*0
*-10 *-15
*0
*0
*-4
*4
*14
*11
*24
*12
*-24
22
59
17
*19
21
*0
20
*-5
21
*9
23
*-4
23
*5
21
*17
18
33
21
44
17
IV
I
2015
II
III
*20
*3
*-5
*0
*-2
*-3
*0
-31
*0
20
Table 7: Transport and Communications – net balances
Transport and Communications
2012
IV
I
2013
II
III
IV
I
2014
II
III
A. Activity in the quarter
1. Total activity
2. Sales of services to residents
3. Sales of services to nonresidents
4. Utilization of equipment (capacity utilization, etc.)
5. Number of employees
B. Expected activity in the following quarter
6. Expected activity in the following quarter
Number of responding companies
*1
*35
*-1
*-5
*4
*-7
*-13
*-7
*34
*-9
*-8 *-1 *-12
*-22 *-14 *3
*-7
*13
*0
*17 *-30 27
*-3
*-14 -52 *-10 *-13
-45
*8
*-1
43
*-5
*6
*4
*-1
*14
*-13 *14
*-12 *-13
*2
*7
*-34
*-14
22
*-3
*-16 *-6
-27 *-10
*9
*0
*7
*-3
*-20
32
*-21
*6
*15
*15
*9
*-8
*13
*28
20
21
22
15
24
24
25
26
26
26
24
17
Table 8: Hotels – net balances
Hotels
2012
IV
I
2013
II
III
IV
I
2014
II
III
IV
I
2015
II
III
A. Activity in the quarter
1. Total activity
2. Number of bed-nights: Tourists
3. Number of bed-nights: Israelis
4. Average revenue per room
5. Number of employees
-30
*25
*-8
*-18
*29
-33
74
-100 *-28
-57
-46
*36
-50
*-18
*14
-27
-32
*-4
36
*0
*-4
*0
-44
*-12
-32
*-9
*18
*14
35
*-7
*-24 *-19
*-24 -56
-24 *-4
50
*0
57
32
-100
*0
-64
-86
-64
*0
40
-50
-78 -50
*-22 *-14
*23 *7
*-17 *-21
*0
73
*9
*0
B. Expected activity in the following quarter
6. Bookings for next quarter of foreign tourists
7. Bookings for next quarter of Israelis
Number of responding companies
-73
-68
23
-38
*-13
25
*-4
*8
25
*-23 *0
*-5 *-18
22
17
*-13
*-22
23
-68
-58
22
-52
-38
25
-57
-38
23
-43
*-8
14
*-18
*18
11
2014
II
III
IV
I
2015
II
III
33
*19
27
Table 9: Service industries – net balances
2012
IV
I
1. Total revenue from current activity
2. Sales of services in Israel
3. Sales of services abroad
4. Number of employees
5.
of which : trained
6. Number of Israeli workers abroad
*0
*0
*-2
*1
*4
*3
B. Expected activity in the following quarter
7. Total orders
8. Export orders
Number of responding companies
12
*13
178
Service industries
2013
II
III
IV
I
*-6
*-6
*0
*-5
*-3
*-2
12
*8
*8
*4
*4
-6
*4
*4
*2
10
12
*0
18
10
*11
*0
*2
*-2
*6
*-1
*7
*5
*5
*-1
*-3
*-4
*5
*-1
*3
-12
-16
-13
*-4
*-3
*-1
*-4
11
*5
*7
*0
*0
-13
*1
*0
*-5
*-1
*3
*-5
*7
12
*7
*1
*-1
*-3
*-3
*1
*-6
*1
*-3
*-3
18
18
148
*8
*7
173
11
17
168
13
*13
154
17
18
149
*3
13
149
13
*4
145
11
*8
141
12
*11
146
13
*6
150
12
*11
110
A. Activity in the quarter
Table 10: Net balance of the Manufacturing companies by size of company,
2015:Q3
Manufacturing companies
Total
Small
Medium
Large
Output
-18
*-25
-32
*-13
Total sales
-21
*-44
*-24
-18
Domestic sales
-17
*-44
-33
*-8
Exports
-22
-60
-38
-16
Number of companies
113
9
25
79
Table 11: The severity of constraints on carrying out planned activity (average)1
1-Minimal, 2-Moderate, 3-Significant, 4-Very significant
Industry
Manufacturing
Industries
Construction
Trade
Transport and
Communications
Hotels
Service
Industries
1
Constraint
Demand constraints
Volume of export orders
Volume of domestic orders
Supply constraints
Machinery and equipment shortage
Financing difficulties
Labor shortage
Demand constraints
Volume of demand
Supply constraints
Input prices
Financing difficulties
Labor shortage
Machinery and equipment shortage
Land lot Prices
Demand constraints
Volume of orders
Economic & political situation in Israel
Economic situation in the world
Supply constraints
Financing difficulties
Labor shortage
Demand constraints
Booking by foreign tourists
Booking by Israelis
Economic & political situation in Israel
Intensification of competition
Supply constraints
Financing difficulties
Labor shortage
Demand constraints
Booking by foreign tourists
Booking by Israelis
Economic & political situation in Israel
Supply constraints
Financing difficulties
Labor shortage
Demand constraints
Economic & political situation in Israel
Global economic situation
Intensification of competition
Supply constraints
Financing difficulties
Labor shortage
2012
IV
I
II
2013
III
IV
I
II
2014
III
IV
I
2015
II
III
1.3
1.1
1.4
1.2
1.4
1.2
1.5
1.2
1.3
1.1
1.2
1.1
1.2
1.2
1.2
1.2
1.2
1.2
1.3
1.1
1.2
1.1
1.4
1.1
0.3
0.6
0.9
0.3
0.6
0.9
0.5
0.6
0.9
0.5
0.7
1.1
0.5
0.5
0.9
0.4
0.6
0.9
0.4
0.5
0.9
0.4
0.5
0.8
0.4
0.6
1.0
0.4
0.5
0.9
0.4
0.5
1.0
0.4
0.5
1.0
2.1
1.4
1.6
1.7
1.4
1.5
1.6
1.9
1.2
1.6
1.4
1.3
1.5
1.9
2.3
0.4
2.5
1.5
1.7
2.4
0.2
2.1
1.6
1.9
2.3
0.6
2.5
1.5
1.7
2.4
0.7
2.4
1.6
1.8
2.7
0.4
2.7
1.5
1.9
2.1
0.5
2.5
1.4
1.3
2.3
0.6
2.7
1.7
1.7
2.3
0.9
2.8
1.4
1.4
2.5
0.7
2.8
1.7
1.7
2.6
0.9
2.8
1.6
1.5
2.6
0.6
2.9
1.6
1.6
2.4
0.5
3.0
0.9
1.4
1.0
0.9
0.9
1.0
0.5
0.8
0.9
0.6
0.8
0.7
0.7
0.9
0.7
0.8
0.8
0.8
0.7
1.0
0.8
1.0
1.5
0.9
0.7
0.9
1.1
0.8
0.9
0.8
0.9
0.9
0.8
0.8
0.9
0.9
1.2
0.8
0.9
0.9
0.7
0.9
0.6
0.9
0.7
1.0
0.6
0.9
0.6
0.7
0.5
0.8
0.6
0.8
0.5
0.9
0.7
0.9
0.6
0.9
1.2
0.9
1.5
2.4
0.6
0.4
1.4
2.5
0.8
0.9
1.4
2.2
0.6
0.4
1.3
1.9
0.9
0.9
1.3
2.2
0.8
0.6
1.4
2.1
0.8
0.6
1.2
2.4
1.6
1.2
1.9
2.3
1.3
1.0
1.4
2.1
1.1
1.0
1.4
2.4
1.1
0.9
1.4
2.3
0.9
0.9
1.4
2.1
0.9
1.2
1.3
1.2
1.3
1.7
0.9
1.2
1.1
1.1
1.1
1.3
1.1
1.3
1.3
1.4
1.2
1.4
1.3
1.2
0.9
1.8
0.5
1.8
2.1
1.4
1.8
2.3
1.4
1.6
1.4
1.2
1.2
2.0
1.2
1.4
1.6
1.3
1.2
1.4
1.6
1.5
1.6
1.4
1.5
3.4
1.9
2.5
3.4
1.6
2.4
2.5
1.5
2.2
2.8
1.6
2.0
2.8
1.5
2.0
0.8
0.6
0.6
1.2
0.7
1.2
0.9
1.4
0.9
1.2
1.0
1.7
0.9
1.8
0.2
1.3
0.6
1.1
0.5
1.5
0.3
1.8
0.6
2.3
1.2
1.4
1.8
1.0
1.2
1.7
1.0
1.1
1.7
1.0
1.2
1.7
0.9
1.1
1.7
0.9
1.0
1.7
1.0
1.1
1.8
1.5
1.1
1.7
1.2
1.1
1.7
1.0
1.0
1.6
1.0
1.0
1.7
0.9
1.0
1.7
0.9
0.9
0.8
0.9
0.8
1.0
0.8
0.9
0.8
1.0
0.8
0.9
0.8
0.9
0.8
0.9
0.8
1.0
0.7
0.9
0.6
0.9
0.8
0.9
For each quarter, the most severe supply constraint and the most severe demand constraint are in bold.