The economic rebounds as restrictions are lifted

ISRAEL - In Brief 29 Mar 2021 by Jonathan Katz

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Weekly Macro Wrap Up 29.3.21 Recent economic data remains rather positive and reflects the rapid opening up of the economy on the back of mass vaccination. We stress the weekly credit card purchases which increased by 6% in the last week through the 25.3, and has increased by 31% since mid-February (when most restrictions were lifted). Mobility to the workplace continues to improve as well but still remains way below pre-Covid which is due to both a shift towards more working at home, as well as the still high broad unemployment level of 15.4% in the second half of February. The rate of unemployment includes those on furlough, who will continue to receive 80% of their base salary through June and therefore are less inclined to returning to work, at least for now.More good news is coming from hi-tech service sector exports (software, IT, cyber, etc.) which increased by 9.6% m/m in January (and 7% above average Q420) remains both an important growth driver as well shekel supportive. The weaker data is coming from manufacturing with the PMI still below the 50-point threshold (49.4 in February) with the export orders component still reflecting contraction (43.2).Industrial exports contracted in February, but mostly in the volatile chemicals sector. Due to the rapid rebound in the economy in general we are revising our GDP forecast for this year to 5.3% (from 4.2%).Consumer confidence has rebounded strongly, approaching pre-Covid levels. This is due to both the economic rebound as well as the rapidly declining infection rate and number of seriously ill Covid patients despite the lifting of nearly all restrictions. Nearly 5ml Israelis have received both vaccine doses.Inflati...