Economic activity continues to recover

ISRAEL - In Brief 06 Feb 2024 by Jonathan Katz
The CBS Business Survey for January points further recovery in economic activity. The net balance for current activity improved to +12 points from 7.4 points last month and -1.5 two months ago. Expectations for activity next month remained fairly weak at -1.75 (-2.13 last month) but employment expectations improved to + 2.76 from -1.0. Looking at the various branches show a sharp improvement in expectations in construction (but still slightly net negative) and services, while retail trade turned slightly negative and manufacturing nearly flat. Strong activity in January is likely to boost tax revenues and support a positive print for the fiscal deficit (or surplus) in January, expected to be released later this week. Inflation expectations softened to 3.68% NTM from 2.83% last month, most likely due to shekel appreciation. This important indicator points to further recovery in activity as the intensity of war diminishes, most army reserves were released and restrictions cancelled. Strong tax revenues in January should be good news for the bond market.

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