Israel's unemployment rate, seasonally adjusted, fell from 4.3% in January 2023, top 3.9% in February 2023, the Central Bureau of Statistics reports.
Despite concerns about a financial crisis in the US and expected interest rate cuts later this year, Israel's employment market remains tight and is likely to fuel inflation. In recent interest rate decisions the Bank of Israel Monetary Committee said that the tight employment market in Israel was an important factor in the rate hikes due to upwards pressures on salaries.
On the other hand, there was a fall in job vacancies reported by the Central Bureau of Statistics yesterday, suggesting a fall in demand, and so while the market is still very tight, it is possible that its importance as a factor in the interest rate decision is lower due to the shrinking demand for workers.
Mizrahi Tefahot Bank chief economist Ronen Menachem told "Globes," that the expectation is for a slight decrease to a slight increase in the unemployment figures in Israel. So the tighter the market, the more likely the interest rate will increase. In addition, Menachem points out, the Bank of Israel is also very attentive to the depreciation of the shekel that has been taqking place and it seems that "the chance of a sharper interest rate hike (at least 0.5%) will increase. Bank Governor Prof. Amir Yaron was very clear about the determination to fight inflation," Menachem stressed.
Published by Globes, Israel business news - en.globes.co.il - on March 20, 2023.
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