Business/consumer sentiment remains elevated, so far

ISRAEL - In Brief 09 Jan 2022 by Jonathan Katz
Business and consumer confidence remains strong in DecemberThe Business Tendency Survey for December reflects expectations of further expansion in all sectors, except for the hotel sector (due to incoming flight restrictions).The Poalim consumer confidence index improved slightly in December and has basically remained stable (and strong) in the past 4 months.So far, business/consumer sentiment does not appear too effected by the surge of Omicron infections.Google mobility in the last week of December remained fairly stable, with only a slight decline in mobility to the workplace, but this is likely to decline further in January as more workers are working from home and infections are rising sharply.Wage growth remains fairly moderateThe average wage declined 2.2% m/m in October, erasing September’s increase, on the back of strong employment growth.The annual rate of wage growth is currently at 3.2%, and concentrated in the hi-tech sector and construction.The BoI has noted that wage growth has returned to the pre-Covid pace.The expansion of the monetary base slowsFollowing an expansion of 26% in 2020, 2021 witnessed slower growth at a pace of 12%.Growth of cash in circulation slowed to 9% in 2021 from 21% in 2020.Slowing expansion of the monetary base is supportive of slowing inflation this year.FX: The Bank of Israel purchased 739ml USD in December (following 4bn in November) in order to slow shekel appreciation. The shekel appreciated by 1.6% in December against the basket of currencies.Bonds: We continue to see value at the long end of the curve due to the low inflation environment and fairly low fiscal deficit (and low bond issuance).Last week, yields on the Israel ...

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