IP accelerates, job market tightens

ISRAEL - In Brief 18 Aug 2016 by Jonathan Katz

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Industrial production in Q2 increased 5.9% (SAAR) following growth of 4.9% in Q1. The high tech sector witnessed expanded 14.7% following 4.3% respectively. The non-high tech sector witnessed contraction of 2.2% in Q2 following growth of 4.2% in Q1. The number of workers in industry increased by 1.2% annual both in Q2 and Q1, a sign of confidence in this sector of future expansion Revenues from retail trade was up 1.7% in Q2 following 7.0% in Q1 as PC continues to provide the main growth engine. This moderation in growth is unclear, as recent GDP data showed PC accelerating to 9.5% in Q2 following 6.1% in Q1. Unfilled job offers as a percentage of the labor force increased to 3.9% in July from 3.5% in June. This is the highest level since Jan 13! This is an additional sign of a tightening labor market. The sectors showing significant unfilled job offers include retail trade, personal services and construction. Recent economic data paint a generally positive growth dynamics in Israel (especially 2.9% growth in 1H16). Domestic demand remains robust supportive of some inflationary pressure in the non-tradeable sectors. In addition, this positive macro environment is not supportive of further loosening. These trends support further pressure for ILS appreciation.