n 2010 and Q1 2011, Israeli economic activity substantially expanded and this was expressed in high growth figures and a rise in domestic demand and private consumption. The rise in private consumption was supported by a fall in the rate of unemployment, and a rise in the rate of employment and real salaries. The improvement in the situation of Israeli households directly influenced the rate of the services and trade sector growth.
The services and trade sector is the lion's share of Israel's business product, and in 2010, it was responsible for 57% of business product in the economy. The sector's product recorded 8% growth in 2010 compared with growth of 4.3% in 2009. In 2010, the retail and wholesale revenue index rose by a rate of 7-9% in real terms. The rise in the revenue index continued in Q1 2011. The Central Bureau of Statistics reported that the pace of growth and household expenditure on durables rose 13% in real terms in 2010. In a period of economic boom, consumer spending on durables grows at a higher rate than expenditure on everyday products. Despite its sharp rise it is not considered exceptional compared with previous volatility.
While growth in the trade sector led domestic activities, exports of services in most fields showed only a slight rise. The contribution by exports of services to overall growth was mainly through a rise in the export of tourist services which increased transport services. Looking ahead, we feel that the services and trade sector will continue to enjoy the expansion of private consumption in 2011 but the expectation is that the pace of private consumption will become more modest during the year following the rise in interest and the rise in prices.