By Steven Scheer

JERUSALEM (Reuters) – Israel’s jobless rate slipped to 2.6% in December from 2.7% a month earlier, according to the Central Bureau of Statistics, indicating that military conflict continued to impact the country’s labor market.

More than 22% of the labor force were temporarily absent from work in December due to military reserve duty, down from 28% in November.

The percentage of men temporarily absent from work due to military service fell to 38.5% in December from 48.6% in November.

Israel forged a ceasefire with Hezbollah in Lebanon in late November. Prior to that, it was fighting both Hezbollah and the Palestinian militant group Hamas in Gaza, requiring a massive call-up of reservists.

In contrast, the percentage of women temporarily absent from work due to military service rose to 6.3% in December from 5.4% in November.

Last week, Israel reached a ceasefire deal with Hamas that would bring back 33 of the 98 hostages held in Gaza since October 7, 2023, in exchange for the release of Palestinian prisoners in Israel.

Israel’s employment rate stood at 61.2% in December, while the labor participation rate was steady at nearly 63%.

The bureau noted that 9% were absent from work due to economic reasons.

The broadest measure of the jobless rate – discouraged workers, plus those not participating in the labor force who stopped working due to dismissal during the last two years, plus employed persons temporarily absent from work for economic reasons, plus unemployed persons – edged down to 4.3% in December from 4.6% in November.

This month, the Bank of Israel held its benchmark interest rate at 4.5% for the eighth straight time, with central bank chief Amir Yaron citing a “tight” labor market.