Signs of increasing wage pressure

ISRAEL - In Brief 05 Jul 2023 by Jonathan Katz
Wage growth appears to be accelerating. Average wages in May were 5.4% above that one year ago, accelerating from 5.1% y/y in April (according to initial data from the CBS). Detailed wage data exists only for April and points to rapid wage growth in manufacturing (6.4% y/y), retail (6.6%) and food services. A tight labor market is supporting wage pressure and this has become an inflationary factor, especially in the service sectors. So far, recent monetary decisions have not conveyed significant concern regarding wage growth, but recent wage data could be a supporting factor in next week’s rate decision, likely to be a rate hike, especially if the shekel continues to weaken. High-tech service sector exports in April reflect basically stability, similar to exports YTD, and 3.6% above the 2022 level (average monthly). Export growth in this important economic driver appears to be slowing so far this year.

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