Key Takeaways: Israel's Business Confidence Index fell to 19.52 in February from January's 20.5, marking its first decline in three months. The reading remains above the 12-month average, but momentum has softened. Market reaction was muted, with equities holding steady and the shekel showing little movement.
Israel Business Confidence Dips in February: Momentum Cools After Three-Month Rally
Israel's Business Confidence Index posted a moderate decline in February, breaking a three-month streak of gains. Released March 9, the latest data highlight a shift in sentiment as firms weigh persistent macroeconomic headwinds.
Big-Picture Snapshot
Drivers This Month
- Manufacturing sentiment: -0.6pp
- Services outlook: -0.3pp
- Export orders: +0.1pp
Policy Pulse
The February reading of 19.52 stands above the 12-month average of 18.17, but remains below the Bank of Israel's informal optimism threshold of 21.Market Lens
Markets shrugged off the dip in confidence, with the TA-35 index closing flat on the day of release. Investors appear to be awaiting more decisive signals from upcoming macro releases before repositioning.Foundational Indicators
Historical Context
February's 19.52 compares to January's 20.5 and December's 19.7. The index has climbed 32% since July's low of 14.8, but the latest print marks the first MoM decline since October's 18.0.Key Figures
- February 2026: 19.52- January 2026: 20.5
- December 2025: 19.7
- October 2025: 18.0
- 12-month average: 18.17
- July 2025 trough: 14.8
Market Lens
Currency markets showed little immediate reaction, with USD/ILS holding within a narrow range post-release. The muted response reflects the index's continued resilience above historical norms.Chart Dynamics
What This Chart Tells Us: The recent dip interrupts a robust recovery trend, but the index remains well above last summer's lows. Directionally, sentiment is cooling but not reversing, suggesting firms are cautious yet not pessimistic.
Forward Outlook
Scenario Analysis
- Bullish (20%): Index rebounds above 21 if export demand and domestic investment accelerate.
- Base (60%): Confidence stabilizes between 19 and 20.5 as firms digest mixed signals.
- Bearish (20%): Further declines toward 18 if geopolitical or inflation risks intensify.
Risks and Catalysts
Upside: Stronger global demand, easing financial conditions. Downside: Policy uncertainty, regional tensions, cost pressures.Methodology
The index aggregates survey responses from manufacturing, services, and trade sectors, weighted by sectoral GDP share. Data sourced from Sigmanomics and official Israeli statistics[1].Closing Thoughts
Market Lens
Equities and the shekel both traded sideways after the release, reflecting a wait-and-see stance. While the index's retreat signals caution, its level above the long-term average suggests underlying resilience in Israel's business sector.Key Markets Reacting to Business Confidence
Israel's business sentiment readings can influence a range of asset classes, from equities to currencies. The following symbols have shown sensitivity to shifts in confidence, reflecting both domestic and global investor positioning.
- AAPL: Correlates with global risk appetite; Israeli confidence boosts tech sector optimism.
- EURUSD: Moves in tandem with regional sentiment shifts, especially during periods of heightened uncertainty.
- BTCUSD: Often sees increased flows when confidence wavers, as investors seek alternative assets.
| Year | Business Confidence | AAPL |
|---|---|---|
| 2020 | 12.4 | Positive correlation: AAPL rose as confidence recovered post-pandemic. |
| 2022 | 15.9 | Moderate correlation: Both moved higher amid global economic reopening. |
| 2024 | 17.8 | Weaker link: AAPL outperformed despite flat confidence readings. |
| 2026 | 19.52 | Correlation returns as both trend upward in early 2026. |
FAQ
- What does Israel's latest Business Confidence reading indicate?
- It shows a moderate decline to 19.52 in February, ending a three-month rally but remaining above the 12-month average.
- How does this Business Confidence trend affect markets?
- Markets were largely unmoved, with equities and the shekel trading flat, reflecting resilience despite the dip.
- What is the focus of this report?
- The report analyzes Israel's Business Confidence Index, its drivers, historical context, and implications for markets and policy.
Israel's business sentiment remains robust despite the latest pullback, signaling cautious optimism among firms.
Updated 3/9/26
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
- Sigmanomics Economic Data Portal, Israel Business Confidence Index, accessed March 9, 2026.
- Bank of Israel, Business Sector Surveys, 2025–2026.
Over the past six months, the index has remained in positive territory, with only two months—October and February—showing a contraction. The current level is 1.52 points below the recent peak and 4.72 points above the July trough.