Israel’s Unemployment Rate for December 2025 Holds at 3.10%: Labor Market Steady Amid Regional Uncertainty
Israel’s unemployment rate for December 2025 was reported at 3.10%, unchanged from November’s reading and modestly above the 12-month average, according to the latest release from the Sigmanomics database. The data, published January 19, 2026, underscores a labor market that remains tight but faces mounting macroeconomic crosscurrents.
Table of Contents
Big-Picture Snapshot
Israel’s labor market closed 2025 with an unemployment rate of 3.10% for December, matching November’s figure and marking a slight uptick from the 12-month average of approximately 3.00%[1]. This stability comes after a year of moderate fluctuations: unemployment dipped as low as 2.90% in April, September, and October, and peaked at 3.10% in June and December. Year-over-year, December’s rate is up 0.20 percentage points from 2.90% in December 2024.
Drivers this month
- Labor force participation remained robust, with no significant layoffs in major sectors.
- Tourism and tech hiring offset softness in manufacturing.
- Regional security concerns did not translate into immediate job losses.
Policy pulse
The Bank of Israel’s policy rate remains restrictive, with the central bank closely monitoring labor market tightness for inflationary pressures. December’s reading is consistent with the central bank’s target of maintaining unemployment near structural lows, but above overheating thresholds.
Market lens
Immediate reaction: ILS/USD was little changed, while TA35 equities saw a muted response. The steady print was largely anticipated, with bond yields and the shekel showing minimal volatility in the first hour after release.
Foundational Indicators
Israel’s December 2025 unemployment rate of 3.10% aligns with recent monthly prints: November (3.10%), October (3.00%), and September (2.90%). The 12-month average stands at 3.00%. The labor force participation rate remains above 61%, while job vacancy rates have moderated from mid-2025 highs but remain elevated relative to pre-pandemic norms.
Drivers this month
- Services and high-tech sectors continued to add jobs, offsetting minor declines in construction.
- Wage growth cooled to 3.20% YoY, down from 3.60% in October, easing wage-push inflation risks.
- Inflation for December was 2.70% YoY, below the central bank’s upper target band.
Policy pulse
Fiscal policy remains expansionary, with government spending on security and infrastructure supporting employment. However, the budget deficit widened to 3.40% of GDP in Q4 2025, raising questions about long-run fiscal sustainability if labor market slack emerges.
Market lens
TA35 index held steady, reflecting investor confidence in labor market resilience. Sovereign bond spreads narrowed slightly, suggesting limited near-term credit risk from labor market trends.
Chart Dynamics
Drivers this month
- High-tech and services hiring offset by a mild pullback in manufacturing employment.
- Seasonal factors had limited impact, as holiday-related hiring was in line with prior years.
Policy pulse
The Bank of Israel is likely to maintain a wait-and-see stance, as the steady unemployment rate reduces pressure for immediate policy shifts. The reading supports the case for holding rates steady, barring external shocks.
Market lens
Immediate reaction: USDILS was flat, and TA35 saw no significant move. Market participants interpreted the data as confirmation of ongoing labor market stability, with little impact on rate expectations or risk sentiment.
Forward Outlook
Looking ahead, Israel’s labor market faces a mix of upside and downside risks. The base case (60% probability) is for unemployment to remain near 3.00–3.20% through Q1 2026, supported by resilient domestic demand and ongoing government spending. A bullish scenario (25% probability) sees unemployment dipping below 3.00% if global growth rebounds and regional tensions ease. Conversely, a bearish scenario (15% probability) could materialize if geopolitical risks escalate or if tighter financial conditions trigger layoffs, pushing unemployment toward 3.40%.
Drivers this month
- Continued tech sector expansion and infrastructure projects are expected to sustain hiring.
- Potential headwinds include weaker export demand and higher borrowing costs.
Policy pulse
The Bank of Israel is likely to keep rates on hold, but will pivot quickly if unemployment rises sharply. Fiscal authorities may face pressure to rein in spending if deficits persist, which could weigh on job creation in the medium term.
Market lens
TA35 and USDILS are expected to remain range-bound unless labor market data surprises to the upside or downside. Investors are watching for signs of wage acceleration or job losses as triggers for repricing.
Closing Thoughts
Israel’s December 2025 unemployment rate of 3.10% signals a labor market that is stable but not immune to external shocks. The steady print, in line with recent history, suggests the economy is weathering global and regional uncertainties for now. Policymakers and investors will remain vigilant for signs of slack or overheating, as the balance of risks shifts into 2026.
Key Markets Likely to React to Unemployment Rate
Israel’s unemployment rate is a key macroeconomic indicator that influences a range of financial markets. The following tradable symbols have historically shown sensitivity to labor market data, reflecting shifts in growth, inflation, and risk sentiment. Each is presented in red and linked to its Sigmanomics source.
- TA35 (Israel’s main equity index; typically rises on labor market strength, falls on signs of slack)
- USDILS (USD/ILS forex pair; shekel tends to strengthen on robust jobs data, weaken on labor market deterioration)
- TEVA (Teva Pharmaceutical; as a major Israeli employer, its shares can react to labor and wage trends)
- EURILS (EUR/ILS forex pair; sensitive to Israel’s macro outlook and labor market-driven rate expectations)
- BTCILS (Bitcoin/ILS; crypto flows can reflect risk sentiment shifts following major economic releases)
| Year | Unemployment Rate (%) | TA35 YoY Return (%) |
|---|---|---|
| 2020 | 5.20 | -8.70 |
| 2021 | 4.10 | 31.20 |
| 2022 | 3.70 | 5.80 |
| 2023 | 3.40 | 3.10 |
| 2024 | 2.90 | 7.40 |
| 2025 | 3.00 | 4.60 |
TA35 returns have generally improved as unemployment declined, with the strongest equity rallies following sharp labor market recoveries. The relationship has moderated as the cycle matured, but labor data remains a key input for equity risk pricing.
FAQ
Q: What is Israel’s latest unemployment rate and why does it matter?
A: Israel’s unemployment rate for December 2025 is 3.10%. This figure signals labor market health and influences monetary policy, fiscal planning, and market sentiment.
Q: How does the December 2025 reading compare to previous months?
A: December’s 3.10% matches November and is slightly above the 12-month average of 3.00%. The rate has been stable, ranging from 2.90% to 3.10% over the past year.
Q: What are the main risks and opportunities for markets following this release?
A: The main risks are from regional tensions and tighter financial conditions, while opportunities stem from ongoing tech sector growth and resilient domestic demand.
Bottom line: Israel’s labor market remains resilient, but vigilance is warranted as macro headwinds and policy shifts loom in 2026.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
Updated 1/19/26
- Sigmanomics database, Israel Unemployment Rate, release January 19, 2026.
- Bank of Israel, Monetary Policy Reports, December 2025.
- Israel Central Bureau of Statistics, Labor Force Survey, December 2025.
December 2025’s unemployment rate of 3.10% matches November’s 3.10% and is just above the 12-month average of 3.00%. The rate has oscillated between 2.90% and 3.10% since April 2025, with no sharp inflections. Compared to June’s 3.10% and the recent low of 2.90% in September and October, the current figure signals a plateau rather than a reversal.
Over the past six months, the unemployment rate has averaged 3.00%, with only minor month-to-month changes. The year-over-year comparison shows a modest increase from December 2024’s 2.90%, suggesting the labor market remains tight but is no longer tightening further.