Bank of Israel launches new monthly Index of Economic Activity replacing the Composite State of the Economy Index and reports a 0.1% rise in August

The Bank of Israel has begun publishing a new monthly Index of Economic Activity, a model-based indicator drawing on more than 30 economic series to track short-term changes in economic activity. The first release shows the index increased by 0.1% in August, and the new measure replaces the “Composite State of the Economy Index”, whose publication ended last month. The index reflects a three-month average of the estimated monthly growth of GDP and will be calculated and published each month around two weeks after the end of the relevant month. For the August reading, the Bank noted sharp fluctuations in activity across June to August amid Israel’s military operation against Iran and the subsequent recovery. Negative contributions came from lower goods exports in August, industrial production and revenue data for June, indirect tax receipts in June to July, labor market and gasoline consumption data for June, and weaker second-quarter GDP, while credit card purchases in July and August, June import data, and financial indices mainly in May to July provided offsetting support. The pace of growth was described as slightly below the long-term trend of about 0.3%. The Bank cautioned that the June to August reference period was unusually volatile and that recovery indicators remain incomplete, so revisions may follow in coming months; the Composite Index will continue to be calculated over the coming year for concatenation and control purposes and will remain available in the Bank’s series database.