BoI company survey pointing to modest growth in Q3

ISRAEL - Report 12 Aug 2019 by Jonathan Katz

The BoI Company Survey for Q2 2019 is pointing to modest growth.
* The net total balance is only +5, below that in 2018 (+12.8).
* Industry and retail trade are reporting contraction in activity, while services, construction and hotels are reporting expansion.
* Manufacturing export orders reflect contraction, while domestic orders are slightly positive.

The Poalim consumer confidence index has drifted lower, possibly due to political instability and expectations for higher taxation.

Average wages continue to increase (4.1% y/y) on a tight labor market and is a factor supporting some inflationary pressure.

July's fiscal data was somewhat positive, with strong tax revenues.
* The deficit declined to 3.8% GDP LTM (from 3.9% last month).
* Tax revenues were up 5% y/y in July on strong VAT collection.
* This is in line with fairly steady private consumption growth.
* This is a positive print for the bond market, but the deficit is still expected to breach 4% GDP this year, requiring significant consolidation in 2020.

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