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Industrial production

The trend increase of industrial production accelerated somewhat in the final months of 2011, through November, but there was a seasonally adjusted decline in November itself, which leads to expect a trend increase in December slower than 0.3%.

Total revenues of economic sectors

The monthly trend change in total revenues of economic sectors has been in the narrow range of -0.1% to +0.1% since February 2011. We do not expect the December 2011 change to fall outside this range.

State-of-economy index

The monthly change in the Bank of Israel's State-of-the-Economy index has been a minimal average 0.2% since mid-2011. Our forecast for January 2012 is a similar of lesser change.

Inflationary expectations 12 months ahead

Inflationary expectations 12 months ahead have been less than 2% consistently since September 2011. We estimate that expectations will remain below 2% in January 2012 as well.

Chain store retail sales

The monthly trend increase of chain store retail sales accelerated somewhat during the 2nd half of 2011. But in December 2011 itself, there was a sharp seasonally adjusted decline in sales. Our forecast for January 2012 is therefore that the trend will show a slower increase than the 0.4% increase in December 2011.

Bank of Israel interest

The Bank of Israel surprised analysts by lowering interest in February 2012 from 2.75% to 2.5%. No further reduction is expected in March 2012.

Nights in tourist hotels

The trend increase of tourist hotel nights remained steady at 1.5-1.6% monthly during the final 3 months of 2011 while that of Israeli hotel nights remained steady at 0.4-0.5% from mid-2011 through December. Our forecasts for January 2012 are slower trend increases in both components.

Total sales of new apartments

The trend of total new apartment sales turned positive in December 2011 – after remaining negative throughout 2011 – following the steep 25% seasonally adjusted increase in sales in December. Our understanding of this jump is that it was a one-time development, so we forecast a possible return to a negative trend in January 2012.

Unemployment rate (Labor Force Survey)

The (seasonally adjusted) unemployment rate in the 3rd quarter of 2011 was 5.6%, up from 5.5% in the 2nd quarter. Preliminary data for October-November show a trend rate of 5.4%. Our forecast for Q4/11 is a rate in the area of 5.5%, pointing to stability in unemployment for most of 2011.

Residential construction starts

Residential construction starts dropped sharply in the 3rd quarter of 2011 (by almost 10% based on seasonally adjusted data), turning the trend negative after 5 consecutive quarters with a positive trend. We forecast a continuing negative trend in the final quarter of 2011.
 

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