Israel goes to elections tomorrow

ISRAEL - In Brief 30 Oct 2022 by Jonathan Katz

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Labor market remains tight, but slightly less  Unemployment increased in September slightly to 3.7% (sa) from 3.5% with the number of employed down nearly 28k.  On the other hand, the number of job vacancies ticked slightly higher. Growth appears to be decelerating modestly Credit card purchases maintained a slow pace of 3% growth in Q3, slightly above population growth of 2%. Manufacturing exports contracted by 10% saar in Q3. Although the PMI is up to 51.3 in Sept, export orders reflect contraction. Imports of consumer imports (excluding vehicles) contracted by 5.7%. Imports of new vehicles declined by 33% saar in Q3. This will reduce GDP growth as taxes on imports are factored into the GDP. At the moment, the GDP print for the 3rd quarter (to be released Oct. 16th) is expected to be weak, with manufacturing exports down, private consumption growth moderate and taxes on imports down sharply. On the other hand, residential investments continue to expand rapidly. We expect GDP growth in 2023 to slow to 2.8% from 6% in 2022. Inflation: Much uncertainty remains regarding inflation in Q422, especially regarding whether the excise tax reduction on petrol will be cancelled on November 15 as planned. We assume so, and this will contribute 0.4% to inflation in November-December. Election day tomorrow: Israel will go to elections tomorrow (the 5th time in four years). The political map appears evenly divided between the Netanyahu camp (Likud, ultra-orthodox and far-right) and the center-left camp (Lapid, Lieberman, Gantz, and the left-wing and Arab parties). The outcome could be determined by which of small parties do not make it over the 4-mandate threshold. We will put out a...