Initial signs of (modest) slowing demand

ISRAEL - In Brief 27 Jun 2021 by Jonathan Katz

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Highlights: Some initial signs of slowing demand We estimate that credit card purchases declined by 2%-3% m/m (sa) in June, from looking at the weekly data provided through 22.6. On the other hand, the PMI increased by 3.5 points to 56.1 in May as both domestic and export orders increased rapidly. Broad unemployment (including furlough) declined to 9.8% in May from 10.6% in April. Further progress is expected in coming months as the furlough government supports are cancelled for those below the age of 45. Inflation: The inflation forecast one year ahead of the major forecasters increased to 1.4% (on average) in June from 1.0% in May. Import prices of consumer goods increased in dollar terms by 3.5% from Oct 20 to March 21, but only by 0.3% in shekel terms. The manufacturing sector is reporting higher raw material prices. FX: The shekel appreciated last week by 0.5% (against the basket of currencies) and by 1.2% in June so far. Macro fundamentals remain shekel supportive, despite BoI intervention. The bond market: In internal discussions, the new Minister of Finance has been supportive of a downward debt/GDP ratio in coming years, adopting the recommendations of the professional team at the MoF. Monthly bond issuance is expected to decline to 7.5bn in July from 9.0bn in June (to be announced Wednesday afternoon). Foreigners held 11.1% of the domestic gov. debt in April (11.2% in March). In addition, foreigners held 31.1% of the Makam (34.1% in Mar). Private sector debt: The non-banking private debt/GDP level reached 68.6% in Q121, remaining fairly steady in recent years. · Consumer debt/GDP reached 41.6% as housing debt increased and non-housing debt contracted. Mask We...