Growth continued in 1Q

The Bank of Israel research division reported last week that growth in economic activity continued in the first quarter of 2005, in all sectors.
 
The report noted that increase in exports and general domestic activity were the main driving force behind the growth. At the same time, industrial growth slowed, particularly in domestic sales.
 
The report for the first quarter by the Bank's research division, was based on a survey carried out among several industrial companies. The industrial companies reported slower growth in the first quarter, with a minor rise in exports and no change in domestic sales.
 
At the same time, according to the report, the number of employees increased moderately in the first quarter and companies reported moderate increase in export orders for the second quarter, and slight increase in orders for the domestic market. In the domestic market, the survey indicates that throughout the first three months sales by retail companies continued to increase and that retail companies expected their sales to increase further during the second quarter of 2005.
 
Companies expect inflation to reach 2.1% in the next twelve months, very similar to the expectations in the companies survey which was conducted in the fourth quarter of 2004. The survey shows that 9% of companies expect inflation to exceed 3% & 83% of companies in the survey expect inflation to be within 2.0 – 2.5% for the next twelve months.
 
companies expected the exchange rate in twelve months (end-March 2006) to reach NIS 4.55 per dollar, on average, compared with NIS 4.59 in the previous survey. Three-month expectations, i.e., for the end of the second quarter of 2005, are that the exchange rate will be NIS 4.41 to the dollar.