Israel unemployment falls to pre-pandemic low

Israel's unemployment rate has fallen to its lowest level since before the coronavirus pandemic. 

Unemployment was 3.4 percent in July, compared with 3.6 percent in June, the Central Bureau of Statistics reported. The employment rate and the percentage of labor force participation also fell slightly in July compared with June.

The unemployment rate fell to the same level as in February 2020, on the eve of the Coronavirus pandemic.

The very low level of unemployment is bad news in the fight against inflation, as the labor market is likely to cause upward pressure on wages, which will fuel inflation, if the Bank of Israel's rate hikes fail to bring inflation under control.

Wage pressures were seen in June 2023 when the Central Bureau of Statistics reported that the average wage had increased by 6.3 percent compared to June 2022, above the annual inflation rate of 4.2 percent. 

With annual inflation at 4.2 percent over the same period, wages are rising significantly faster than inflation.