Consumer confidence improves modestly, trade point point to steady growth; all supportive of steady monetary tightening

ISRAEL - In Brief 13 Jun 2022 by Jonathan Katz

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Consumer confidence (CBS) improved in May to -14 points from -17 in April. This is the highest print in 2022. The future expectations components, both on the personal level and regarding the economy as a whole improved in May, while the current situation component remained stable. This improved confidence is the opposite of the trend in the US. Apparently, consumers are less concerned over inflation going forward. Trade data point to fairly rapid expansion in manufacturing exports (by 10% saar in February-May, trend data), especially in pharmaceuticals, but in other sectors as well. This is somewhat slower than the previous three months (39%), but is still fairly decent. Imports of consumer goods increased by only 3.3% saar in February-May, as travel abroad surged shifting some domestic consumption abroad. Raw material imports increased by 14% saar in the past three months and imports of machinery and equipment increased by a rapid 37% (all in dollar terms, not real). Generally, export and import are expanding and pointing to steady economic growth. This positive economic environment will support steady monetary tightening, most likely by 0.5% on July 4th, to a level of 2.75% one year from now.