Labor market rapidly tightening

ISRAEL - In Brief 29 Jul 2016 by Jonathan Katz
In Q216 the unemployment rate declined to 4.8% from 5.2% in Q116 (seasonally adjusted data). Looking at the more important age group (closely followed by the BOI) of 25-64 (excluding soldiers and students), unemployment declined to 4.0% in Q2 from 4.5% in Q1. This age group witnessed an increase of nearly 30 thousands new workers, representing annual growth of 4%. The sectors which absorbed new workers include food services and accommodation , real-estate, services, information and telecommunications. Meanwhile, industrial workers declined by an annual rate of 5% impacted by the strong shekel and weak global trade. According to monthly data (often tends to be somewhat volatile), unemployment declined further in June to 3.9% from 4.0% in May and 4.2% in April. The labor market in Israel is rapidly approaching full employment and some wage pressure is already apparent and which will likely continue. This will support some inflationary pressure (especially in the services sector, housing rentals as well) by both boosting domestic demand and pushing up labor costs.

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