Latest / Early Edition with Ryan Bridge / Mark Smith: ASB Senior Economist on New Zealand's unemployment data

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Mark Smith: ASB Senior Economist on New Zealand's unemployment data · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Unemployment is expected to hit a four year high for
• 0:02
  Speaker 1: the end of last year. This morning will be the
• 0:06
  Speaker 1: last major data release before the OCR decision that's coming
• 0:10
  Speaker 1: out on February the nineteenth. The Reserve Bank is forecasting
• 0:13
  Speaker 1: the unemployment rate to rise from four point eight percent
• 0:17
  Speaker 1: to five point one percent. So I'm joined now by
• 0:20
  Speaker 1: senior economists at the ASB Marx Smith.
• 0:22
  Speaker 2: Good morning to you, Mark, Good morning.
• 0:24
  Speaker 1: Do you reckon it's a five in?
• 0:25
  Speaker 2: It could well be. There is a lot of variability
• 0:29
  Speaker 2: in the numbers, obviously, but what we do know is
• 0:32
  Speaker 2: that the economy has gone through a concerted downturn and
• 0:34
  Speaker 2: the labor market tends to follow.
• 0:37
  Speaker 1: Is this just because of the public sector carts or
• 0:39
  Speaker 1: is this happening across the board.
• 0:41
  Speaker 2: Yeah, it's a lot more broad based than that. But
• 0:43
  Speaker 2: obviously Willington will be acutely feeling the pain. But there
• 0:48
  Speaker 2: are other regions and other groups as well that will
• 0:50
  Speaker 2: be also feeling the brunt of this.
• 0:53
  Speaker 1: Okay, so who's hit hardest, who's not getting the jobs?
• 0:57
  Speaker 2: When you look at the unemployment rates, really the pick
• 0:59
  Speaker 2: up that have been very sizable for the younger age
• 1:02
  Speaker 2: groups that the young cohorts, so Essentially what happens is
• 1:05
  Speaker 2: really the last ones into the labor market typically the
• 1:08
  Speaker 2: first one's out. So really those groups, and you're looking
• 1:11
  Speaker 2: at some effort groups, particularly Pacific Islands and Maudi as well,
• 1:15
  Speaker 2: they really start to feel the bunt from this downturn.
• 1:18
  Speaker 1: What could this do to wage pressure?
• 1:21
  Speaker 2: What we have been seeing is that wage pressures have
• 1:23
  Speaker 2: been really calling the economy. To give you an idea
• 1:26
  Speaker 2: of what's been happening, the economy is likely to lose
• 1:29
  Speaker 2: net thirty thousand jobs over last year. So as the
• 1:31
  Speaker 2: economy is slowed, the demand of labor is called, and
• 1:35
  Speaker 2: labor's demands of labor typically means much core will increase
• 1:38
  Speaker 2: in wages, and that combined with lower inflation, we'll see
• 1:42
  Speaker 2: those increases in wages really shrink from the higher of
• 1:45
  Speaker 2: five to six percent to probably under three percent by
• 1:48
  Speaker 2: the end of the year. And not that really means
• 1:52
  Speaker 2: press is on inflation are likely to call, and I'll
• 1:55
  Speaker 2: be encouraging from an inflation point of view.
• 1:58
  Speaker 1: I mean, if you're waking up and welling to this morning,
• 2:00
  Speaker 1: I just told you about your rateable values falling by
• 2:03
  Speaker 1: a quarter, and now you're hearing that unemployment's bad in
• 2:05
  Speaker 1: that area. Tell me, is there any region that is
• 2:07
  Speaker 1: actually getting good news?
• 2:10
  Speaker 2: Probably typically, though, I think really what we're seeing is
• 2:13
  Speaker 2: a pronounced downtam throughout the economy, but there are some
• 2:17
  Speaker 2: bright spots within that. There are some areas, particularly in
• 2:20
  Speaker 2: provincial areas, where where commodity prices have been strong, produced
• 2:24
  Speaker 2: for terms have been good. But as I said, there
• 2:27
  Speaker 2: are some reasons such as Wellington for example, where the
• 2:30
  Speaker 2: downteam has really been the most acut.
• 2:32
  Speaker 1: Well, all right, Mark, I thank you for your time today.
• 2:34
  Speaker 1: Senior economists at the ASB Marxsmith. For more from earlier
• 2:38
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• 2:41
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• 2:44
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