Manufacturing activity remains fairly strong on domestic demand

ISRAEL - In Brief 21 Jul 2022 by Jonathan Katz
The PMI increased in June by 0.8 points to 53.4 points, moving higher for the third straight month. The domestic orders component increased by 6.4 points to 58.5 (strong expansion) while export orders declined by 4 points to 49.7 (no growth). The production component increased to 57.2 points while the employment component declined slightly to 55.0 (still reflection expansion). Israel’s manufacturing sector appears to be accelerating, this has been reflected in actual manufacturing data as well as industrial exports. This sector is well diversified, with more than half defined as hi-tech, and pharmaceuticals and military exports expanding rapidly. This positive growth trend (apparent in other sectors as well) will allow the Bank of Israel to tighten fairly aggressively without any significant concern regarding an imminent slowdown in activity. We expect two 0.5% rate hikes in August and October with policy rates reaching 2.75% in early 2023.

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