Bottom line: The trade data for July contained no good news; rather there were several indications that things are getting worse. Exports continued to display weakness almost across the board, while imports are now clearly contracting as well — suggesting that the domestic economy was weakening even prior to Operation Protective Edge in Gaza.
The trade deficit for goods, denominated in US dollars, rose in nominal terms to the highest monthly total for the year, whether measured using unadjusted or seasonally-adjusted data, or even trend data.
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Imports have begun to contract. This trend has been apparent among imports of investment goods for some time. It has now extended to consumer goods and even to raw materials and diamonds.
Most trade in goods was not yet affected by the fighting in and around Gaza in July, although they surely will be in August and September. However, the diamond sector was immediately impacted , as foreign buyers were unable or unwilling to come to Israel.
All sectors of exports, as defined by technological intensity, are now in a downtrend.
High-tech exports have been trending lower since January this year, while medium-high tech sectors held up until February, but are now declining at a faster pace.
Medium-low technology sectors are contracting at the fastest pace of all, at 2% or more per month, for the last three months.
Low-technology industries, whose exports were rising until April, have also begun to erode slightly in recent months.