During war with the Hamas terror group, Israeli consumer sentiment deteriorated for a second straight month in November, reaching depressed levels last seen during the coronavirus pandemic lockdowns of 2020, according to data released on Monday.
Overall consumer confidence fell by five points in November, after dropping six points in October compared to September, a consumer survey by the Central Bureau of Statistics (CBS) for November showed, which suggests that people will rein in their spending because they do not feel sufficiently optimistic about the future.
Sentiment plunged after Israel declared war in the aftermath of Hamas’s October 7 onslaught, in which thousands of terrorists crossed the Gaza border and massacred some 1,200 people, most of them civilians including children and the elderly, and abducted over 240. During the first weeks of the fighting, Israel called up a massive 350,000 reservists, which in turn has led to disruptions in operations of many businesses.
The economic fallout from the war and the damage to demand due to depressed sentiment among consumers is negatively affecting private consumption.
The consumer confidence index is graded on a scale of plus 100 to minus 100, with zero marking the midpoint where people would define themselves as being neither optimistic nor pessimistic. The closer a figure is to 100, the more they feel an increase in confidence; the closer a figure is to minus 100, the less they feel confidence.
The latest survey showed that consumer confidence fell from -18 points in September before the outbreak of the war to -24 points in October and -29 in November.
The survey provides monthly information on a series of indicators and is conducted among a representative sample of participants over 21 years of age. Participants were asked for their general assessments of the economic situation, their expectations for a change in the situation, and plans for large purchases and savings in the near future. These assessments are made for three time periods: the past year, the present, and the coming year.
When the surveyed were asked about their intention to make large purchases (houses, cars, etc.) over the next year, compared to their plans for last year, confidence was down to -40 points in November from -30 in October and -18 in September. Generally, the decrease in confidence and the intention to defer large purchases reflects overall concerns about household spending.
Asked about their confidence in the overall economic situation and outlook for Israel over the coming year, the index dropped to -45 points in November, from -42 in October and -34 in September, reflecting fears over the ripple effect of the war on the economy.
The consumer confidence index showed volatility throughout the COVID-19 pandemic, falling as restrictions were applied and rising as vaccination campaigns took effect. During the first general lockdown, the index fell to -31, and reached -28 during the second closure.
But from November 2020 to July 2021, consumer confidence rose steadily. The index hit -1 in August 2021, and rose as the country remained free from restrictions and no further lockdowns were introduced.
The index uses standard OECD guidelines, with overall confidence in Israel behind that of Italy, Spain, and Austria.
Danielle Nagler contributed to this report.