Demand for workers slows, but remains elevated

ISRAEL - In Brief 22 Jan 2023 by Jonathan Katz

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T-bills issuance surges in 2022 In 2022 the BoI issued 235bn in Makam due to strong demand. This was 95bn above net Makam redemption. Parallel to this, the BoI reduced the daily commercial bank deposits by a net 71bn. This net absorption was necessary due to the public sector contribution to monetary expansion of 24bn. The MoF utilized 21bn ILS from “excess issuance” of the past two years to reduce bond issuance in 2022. In 2023, the tools of monetary absorption will likely be more balanced, as policy rates stabilize at 4% in Q123. Job vacancies are gradually trending lower, The number of job vacancies reached 141.5k in December, down from the peak of 150.4k in August. The rate of job vacancies (job vacancies as a % of job vacancies + employed) declined to 4.47% from 5.0% in February, and pre-Covid levels of nearly 3.5%. In Q422, demand for hi-tech workers declined by 35% and declined by 21% for food services, while increasing 12% for construction. Employment growth picked up in December In December, the rate of employment (no. of employment divided by the working age population) increased to 60.9% from 60.7% last month (sa). The rate of unemployment increased as well from 3.9% to 4.2% as the participation rate improved significantly. The rapid increase in new workers is a positive growth indicator. Monetary policy: Five out of the six MPC members voted for a 0.5% rate hike two weeks ago, with one member in favor of 0.75% hike due to the acceleration of inflation and recent shekel depreciation (in December). This underlines a somewhat hawkish bias of the MPC, and supports a 0.25% hike on February 20th (and not rate stability), although much will depend on January’s CPI...