Unemployment Drops to 15-year Low in March

The Israeli unemployment rate was only 6.5% in February, the lowest since 1993.

Unemployment is still dropping, and is approaching levels not seen in 15 years. The Israeli unemployment rate was only 6.5% in February, the lowest since 1993, according to figures released by the Central Bureau of Statistics (CBS) yesterday.

A total of 190,200 people were unemployed in February. In comparison, in February 2007 unemployment was 7.8%, in February 2006 it was 9.0% and in February 2005, 9.3%.

The CBS corrected the January unemployment rate downward yesterday, setting it too at 6.5%, less than the previously released figure of 6.8%.

The treasury forecasted that unemployment in 2008 would stand at 7.2% on average. The Bank of Israel's predictions ranged from 7.3% to 7.8%.

The main cause behind the drop in unemployment is the economic growth in almost all sectors. In addition, lower unemployment and welfare benefits have led more people to return to the workforce.

Today's unemployment rate is considered "frictional unemployment," a natural level where most of the unemployed are between jobs and are expected to find work relatively quickly, and hopefully easily.

Most of the current unemployed are new workers just starting out, such as recent graduates or newly demobilized soldiers.

Among those with higher education, considered at least 15 years of schooling, unemployment is only a few percentage points.

The Bank of Israel's composite state-of-the-economy index rose significantly in March: 0.5%. The measure, published by the central bank's research department, shows that talk of an economic slowdown is still unfounded - though GDP is growing at a slower rate than in 2007.

The biggest increases in March came in services exports, as well as goods imports and exports.

The services export index rose a full 5% for the month, and goods exports were up 4.9%. However, industrial production figures and retail and services sectors had much more moderate increases.

However, the Melnick Index, which is another measurement of the state of the economy, rose by only 0.1% percent for March.

Professor Rafi Melnick of the Interdisciplinary Center in Herzliya, the creator of the competing index, said the economic slowdown is already starting to be felt here in Israel, as a result of the effects of the worldwide economic crisis.