Recent indicators point to steady growth and PC demand

ISRAEL - In Brief 04 Dec 2022 by Jonathan Katz

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Recent indicators have been positive In August-October, credit card purchases (real) increased by 4.1% saar (trend data) following growth of 3.5% in the previous three months. Initial real-time data (through 21.11) point to growth of 2.5%-3% m/m in November. In the past three months, chains store sales increased by 3.9% saar following growth of 2.5%. Hi-tech service exports expanded by 17.8% saar in Q322, accelerating from 5.5% in Q222. According to the BoI: growth remains steady  The Bank of Israel revised the components of the Composite Index of the Economy. Currently “This data is indicative of the continuing growth in economic activity in recent months”, according to the BoI. Monetary policy: Recent economic data suggests steady growth which enables the BoI to continue tightening. Until the next rate decision (Jan 2nd) November’s CPI will be released (we expect inflation to accelerate from 5.1% y/y to 5.4%), as well as many economic indicators. At the moment, a 0.5% hike appears likely. FX: In Q322, Israelis (including institutions, the financial and business sectors) were net purchasers of FX while non-residents sold FX. Despite the current account surplus, the real (business) sector purchased 2.1bn USD. In the short run, the shekel will continue to more influenced by equity market movement than macro fundamentals. Inflation forecast: Petrol prices went up 6% in December (in line with our initial forecast for a 0.5% m/m CPI print), as most of the excise tax reduction was cancelled. There remains an additional 0.33 ILS per liter of excise tax reduction (4.8% price hike), supposedly to be cancelled in January, although we doubt this will happen. The average real wag...