PMI for August 2012 falls heavily

The decline in the PMI was apparent in all index components except for the raw materials price component
 
The Bank Hapoalim and the Israeli Purchasing and Logistics Managers Association’s Purchasing Managers Index (PMI) for August 2012 fell by 6.7 percentage points to a level of 35.2, which is indicative of a large decrease in manufacturing activity.
 
The decline in the PMI was apparent in all index components except for the raw materials price component, which rose for the second consecutive month, by 11.1 points.
 
The manufacturing output component showed a contraction for the second consecutive month and dropped by 9.5 points to a level of 37.4. The domestic new orders and export new orders components also fell, to respective levels of 33.1 and 30.3, and the employment component was down 4.8 points to 34.8.
 
Bank Hapoalim economists noted in the report that: "The downturn in the August PMI was considerable and the level of the index itself is very low. Such low indexes have only been recorded in a few months since the beginning of 2009. All index components show the same trend, confirming the findings of the survey. Current indicators on manufacturing published by the Central Bureau of Statistics reveal similar trends, although not at the same intensity as that indicated by the PMI. Industrial exports are falling and production rose slowly, mainly as a result of the increased production of electronics components."
 
The economy is facing a period when growth drivers will be scarce on the ground: Europe is sliding into a recession, fiscal policy will become tighter, and obtaining sources of finance is becoming increasingly difficult, which is adversely affecting investment. These factors were reflected in the low level of the PMI for August. The index is calculated based on the responses to six questions provided by purchasing managers at leading industrial companies in the Israeli economy.
 
The methodology for computing the index is consistent with the prevalent methodology worldwide for the calculation of purchasing managers' indices. The Israeli index is included in the calculations of the European and global purchasing managers' indices.
 
The Global Purchasing Managers Index published by JPMorgan fell in August to its lowest level since June 2009- 48.1 points. This index showed contraction for the third consecutive month. Although the eurozone remained the principal weak link, the PMI in the USA continued to fall as well and like the global index, this was the third consecutive month when the American index was below the level of 50 points after showing an expansion for thirty four months.