The unemployment rate in Israel fell in February 2023, but experts warn of a possible increase in inflation in the future.
According to a report from the Central Bureau of Statistics, Israel’s unemployment rate decreased from 4.3% in January 2023 to 3.9% in February 2023, seasonally adjusted. This is reported by the publication Globes.
While the US financial crisis and expected interest rate cuts later in the year are worrisome, Israel’s labor market remains tight and is likely to push inflation higher. The Bank of Israel has indicated in its latest interest rate decisions that Israel’s tight labor market is an important factor in the rate hike due to upward pressure on wages.
However, on the last day, the Central Bureau of Statistics reported a decrease in the number of vacancies, indicating a drop in demand. As such, although the market is still tight, it is possible that its impact on the interest rate will be lower due to reduced demand for workers.
Chief economist at Mizrahi Tefahot Bank, Ronen Menachem, told the publication that Israel’s unemployment rate is expected to rise or fall slightly. Thus, the tighter the labor market, the greater the likelihood of an increase in interest rates. In addition, Menahem noted that the Bank of Israel is very closely monitoring the shekel exchange rate, and “the likelihood of a sharp increase in interest rates (at least 0.5%) will increase.” Professor Amir Yaron has made very clear his determination to fight inflation, Menahem stressed.
Earlier, Cursor wrote that at the end of 2022, many companies were forced to reduce their workforce and many citizens were left without work.
It was also reported that in January the unemployment rate in the country began to decline.