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COUNTRY INSIGHTS

Tightening labor market and strong growth support higher rates
ISRAEL · Report · 07 Feb 2022

1. Despite Omicron, economic data in January was generally positive, including the latest business survey and employment growth. 2. Credit growth was rapid in 2021, especially household credit for housing, and this will increasingly become a consideration for monetary policy. 3. We ...

Tightening labor market and strong growth support higher rates
ISRAEL · In Brief · 06 Feb 2022

The business sector survey reflects fairly strong growth in January (except for hotels); the outlook ahead is generally positive. This print is surprisingly strong in light of the peak of the Omicron wave.Wage growth remains moderate Wage growth is averaging 3.4% annual over the past two years, m...

Robust labor data (despite Omicron) is rate hike supportive
ISRAEL · Report · 31 Jan 2022

1. The labor market improved in the first half of January despite the deceleration impact of Omicron. 2. The Omicron wave appears to be peaking, and restrictions on schools and other activities are gradually being lifted. 3. We have updated our inflation forecast in February to 0.4%...

Unemployment declines (and employment improves) despite Omicron
ISRAEL · In Brief · 31 Jan 2022

Robust labor data despite Omicron. In the 1st half of January unemployment declined to 3.5% from 3.9% in the second half of December. Broad unemployment (including Covid furloughs which have increased recently) remained stable at 5.8%. More impressive is the increase in the number of employed by ...

Private consumption contracts (most likely temporarily) due to Omicron
ISRAEL · In Brief · 30 Jan 2022

Private consumption declines on Covid concernsIn Q421, Credit card purchases increased by 1.5% saar, slowing from 8.6% in Q321. A closer look points to a 2.3% m/m contraction in December with service purchases down 5.5%, clearly due to Omicron concerns.Initial data for January through 17.1 point ...

Private consumption growth slows in Q421
ISRAEL · In Brief · 27 Jan 2022

Private consumption slowed in Q421, with credit card purchases up only 1.5% saar following growth of 8.6% in Q321. This is due mostly to the outbreak of the Omicron virus towards the end of the quarter (although purchases of services did increase by 12% saar in Q421). December witnessed a 2.3% m/...

Some deceleration due to Omicron
ISRAEL · Report · 24 Jan 2022

* We maintain our call for a rate hike on April 11, but much will depend on the pace of recovery from Omicron. * Indicators for January point to some deceleration of activity due to Omicron restrictions. * The labor market continued to improve modestly in December. * Job vacancies ...

Some deceleration due to Omicron
ISRAEL · In Brief · 23 Jan 2022

Economic indicators point to some deceleration Credit card purchase declined by 9% in the first 17 days of January as did the Google mobility to the workplace, compared to December; due to the Omicron virus. Expectations are still for a short wave and minimal impact on the economy.Policy makers h...

PMI declines in December
ISRAEL · In Brief · 18 Jan 2022

The PMI declined by 2.5 points in December to 47.8, reflecting a contraction in activity for the first time in four months.The main component which declined sharply was the production output component, and this could be due to spiking Covid infections keeping some workers at home. The domestic or...

We expect a rate hike on April 11
ISRAEL · Report · 18 Jan 2022

1. December’s CPI surprised on the upside as core inflation accelerated to 2.7% y/y. 2. We expect inflation to reach 1.7% this year on the back of wage pressure and higher rental prices, partially offset by shekel appreciation. 3. We expect the BoI to hike on April 11 due to high inflat...

We expect a rate hike on April 11th
ISRAEL · In Brief · 16 Jan 2022

Inflation surprises on the upsideo Inflation in December increased by 0.3% m/m (expectations were for 0.1%), and 2.8% y/y. Core inflation increased by 2.7%.o Inflation surprises were mostly broad-based, with housing rental prices accelerating to 3.3% y/y (from 2.9% last month).o We expect inflati...

High inflation is likely to support a rate hike in April
ISRAEL · In Brief · 14 Jan 2022 · 1 response

December’s CPI surprises on the upside Following two months of downward inflation surprises, inflation in December reached 0.3% m/m (expectations were for 0.1%) and 2.8% y/y (up from 2.4% last month).Food prices surprised on the upside, increasing by 0.5% m/m and 3.5% y/y. Rental prices (OER) inc...

Export growth remains strong in Q4
ISRAEL · In Brief · 13 Jan 2022

Export growth remains strong in Q4 Manufacturing exports expanded by 13% saar in Q4 following growth of 25% in Q3. Export growth was concentrated in computer components, pharmaceuticals and defense industries. Manufacturing exports increased by 15% in all of 2021. In Q4, imports of raw materials ...

Israeli institutions reduce FX exposure sharply
ISRAEL · In Brief · 11 Jan 2022

Israeli savings institutions (with over 0.5 trillion USD under management) have been gradually selling FX all year as higher equity valuations abroad have forced them to sell FX (by derivatives) in order to avoid increasing their FX exposure. Institutions were net FX sellers of 21bn USD through O...

The fiscal deficit reaches 4.5% GDP in 2021, close to half of expectations
ISRAEL · In Brief · 11 Jan 2022

The fiscal deficit in 2021 reached 4.5% GDP, close to half the initial estimates at the beginning of the year (expectations of over 8%). Total fiscal revenues increased by 30% y/y (and by 19% compared to 2019) on the back of capital gains taxation of the hi-tech sector, strong real estate activit...

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