Some deceleration due to Omicron

ISRAEL - In Brief 23 Jan 2022 by Jonathan Katz

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Economic indicators point to some deceleration Credit card purchase declined by 9% in the first 17 days of January as did the Google mobility to the workplace, compared to December; due to the Omicron virus. Expectations are still for a short wave and minimal impact on the economy.Policy makers have decided to cancel some restrictions regarding self-quarantine and school closure, despite the fact that the number of seriously ill continues to rise, although still remains low compared to previous waves.Unemployment declined in December to 4.1% (narrow definition) from 4.5%, but this was mostly due to a decline in labour participation.Job vacancies remain elevated at 141k in December. Nevertheless, this is about 45k above pre-Covid levels, while the number of unemployed compared to pre-Covid employment rate is estimated at 58k. Therefore, we do not yet see a significant mismatch in the labour market, except in specific sectors such as hi-tech.The PMI declined by 2.5 points in December to 47.8, reflecting a contraction in production especially, apparently due to workers staying home due to Covid.Revenues from all sectors expanded by 6.1% saar in October-November compared to growth of 17.5% in the previous three months. Expansion in activity has been concentrated in the service sectors.Manufacturing in Oct-Nov declined by 2.3% saar following growth of 3.3% in the previous three months.Comparing inflation in Israel to the US and UK, reveal that three main items explain lower inflation in Israel: energy, clothing, and vehicles. FX: The shekel weakened against the dollar by 0.9% last week, on the back of equity market volatility. Inflation: Following December’s higher-than-exp...