The labor market remains strong, and economic growth steady (in Q1)

ISRAEL - In Brief 01 May 2023 by Jonathan Katz

---

The labor market remains fairly tight The unemployment rate remained stable at 3.9% in March (similar to Feb), as 25k new job were created while labor participation increased as well. The BoI preferred category (ages 25-64) actually witnessed a decline in unemployment to 3.2% in March from 3.5% in February. Parallel to strong job creation, the demand for new workers is declining as witnessed by decline in job vacancies (concentrated in services). For the BoI, the labor market numbers point to a tightness, and is supportive of further tightening. Exports rebound in March Industrial exports increased by 5.9% m/m in March, following a downward trend since April 2022. Imports, both of consumer goods and raw materials declined in Q123. The trade deficit declined by 13% q/q in Q123 which could indicator a positive trade balance contribution to GDP growth. Other data was also fairly positive, with manufacturing up 4.2% m/m in February, total revenues from the economy up 1.0% and the BoI Composite index up 0.3% in March and 0.25% in February. The BoI sees the Index “signaling growth that closely resembles the multiyear average, after growth moderated in December and January”. On the other hand, credit card purchases decelerated, contracting by 0.5% saar in Q123 (trend data) following growth of 3.1% in Q422. Inflation: Price of regulated daily products (including milk) will go up by 16% over the next two months. This will contribute 0.15% to the CPI. Petrol prices increased by 4% today. On the other hand, the shekel has gradually appreciated recently. May’s CPI is expected to reach 0.6% m/m. Monetary policy: The next rate decision (22.5) will be impacted by April’s CPI print (r...