An index reading below 50 points indicates shrinking industrial activity; a reading above 50 indicates expansion. The improvement in the index in January mainly stemmed from a rise in the export orders component, which rose 7.7 points to 48.6 points.
The production component has been rising for eight months, but the employment component fell 6.3 points in January and again indicates contraction. 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.
Purchasing managers' indices are leading indices that can forecast changes in growth trends; these indices draw extensive global coverage and affect financial markets. Indices include the American ISM index, the European PMI index, and the global index published by JPMorgan Chase Bank.
The Global Purchasing Managers Index published by JPMorgan was stable in January, at 52.9 points, and continues to indicate expansion in new export orders, production, and employment. In the US, the PMI fell for the second successive month, while in the euro block the expansionary trend strengthened. In China, the local PMI fell below 50 points last month.