Private consumption rebounds in November

ISRAEL - In Brief 06 Dec 2020 by Jonathan Katz

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Highlights: Economic indicators continue to point to a gradual recovery Credit card purchases increased by 20% in November due to the partial opening up of the second closure. The data is not seasonally adjusted, we estimate this reflects a 10% growth (sa). Expansion of private consumption will support tax revenues. The Google Mobility Index to the workplace expanded by 10% in November (end-month), compared to a 3% decline in avg OECD. The Poalim Consumer Confidence Index increased by 9.7 points in November, approaching pre-second closure levels. Business confidence improved in November with expansion expected in industry and services, while retail trade remained flat, construction and hotels expecting contraction. Fiscal deficit: The fiscal deficit reached 11.1% GDP in the last 12 months through November. Expenditures are up 19.7% y/y in Jan-Nov, while tax revenues are down 3.1%. We expect 2020 to end up with a deficit of 11.8%. Disposable income up this year: Total income from salaried workers (not including self-employed), including government support, has increased by 2.6% y/y in January-September. Total wages declined by 3.4% but this was offset by a 21.7bn increase in government social support (unemployment benefits, etc.). FX: Last week, the Shekel appreciated by 1.6% against the dollar and weakened by 0.5% against the Euro. The shekel appreciated by 0.66% against the basket of currencies (4.1% YTD). § Israeli institutions sold FX in October totaling 1.2bn USD, reducing their FX exposure to 18.3% of all assets from 18.6% in September. Covid-19 infections have drifted higher: The number of infections has continued to move higher, averaging 1,000-1,500 per day, an...