CA surplus remains strong, net FDI turns negative

ISRAEL - In Brief 17 Jun 2024 by Jonathan Katz

Macro fundamentals remain shekel-supportive, but slightly less in previous. The current account surplus reached 6.8bn USD in the 1st quarter of 2024, down from 9.3bn in Q423, but higher than one year ago (5.7bn USD, all SA). In Q124, the service account surplus held nearly stable at 10.5bn while the trade deficit increased to 6.6bn from 4.5bn. Net FDI was negative 2.5bn in Q124 (negative 0.3bn in Q423) with Israelis investing 3.6bn abroad and foreigners investing 1.1bn in Israel. Total investments (including financial) by Israelis abroad reached 7.5bn following 10.2bn in Q423. Generally, the CA surplus remains shekel supportive, but the net financial outflows on the back of geopolitical risks have more than offset this factor. The number of job vacancies continue to push higher, up 0.5% m/m in May, and up 17.5% compared to pre-war (Q323). Job vacancies in construction are up 59% (compared to Q323), up 13% in manufacturing, 25% in trade, and 9% in services. This is a strong indicator of a tight labor market (especially in construction due to the lack of Palestinian workers), which supports wage/inflationary pressure. Unemployment in May will be released on Thursday (3.4% in April).

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