Latest / Early Edition with Ryan Bridge / Michael Gordon: Westpac Senior Economist on the unemployment rate

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Michael Gordon: Westpac Senior Economist on the unemployment rate · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: We get another look into our job market today, and
• 0:02
  Speaker 1: I wouldn't hold your brief if you're expecting good positive news.
• 0:05
  Speaker 1: Economists reckon unemployment set to hit five point three percent,
• 0:08
  Speaker 1: highest and nine years, up from five point one in
• 0:10
  Speaker 1: the last quarter. Michael Gordon, Westpac senior economists with me
• 0:13
  Speaker 1: this morning. Michael, good morning, Good morning. Is this as
• 0:16
  Speaker 1: bad as it's going to get?
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  Speaker 2: I think we're getting towards the end of it, if
• 0:21
  Speaker 2: not necessarily there yet, because the labor market tends to
• 0:25
  Speaker 2: be one of the more lagging parts of the economic cycle.
• 0:29
  Speaker 2: Even as we've seen some signs of better activity this year,
• 0:32
  Speaker 2: it's taken we're not seeing the same a degree of
• 0:35
  Speaker 2: improvement come through in the jobs numbers. Yet we know
• 0:37
  Speaker 2: that hiring is pretty low at the moment, so it's
• 0:40
  Speaker 2: sort of hard to get people out of unemployment if
• 0:43
  Speaker 2: businesses aren't hiring at the moment. So we're thinking probably
• 0:46
  Speaker 2: the peak in the unemployment rate is either around here
• 0:50
  Speaker 2: or slightly higher, But maybe by the end of this
• 0:53
  Speaker 2: year early next year we should see some science of improvement.
• 0:55
  Speaker 1: Okay, what about this idea of labor hoarding where people
• 0:59
  Speaker 1: firms are anticipating things will get better, so you hold
• 1:02
  Speaker 1: on to staff hope, you know, carry them over until
• 1:05
  Speaker 1: things get better. But actually things are taking a long
• 1:07
  Speaker 1: time to get better, so do those people get let
• 1:10
  Speaker 1: go in the meantime?
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  Speaker 2: I think there is an element of that already happening.
• 1:15
  Speaker 2: It is again a part of that that lagged aspect
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  Speaker 2: of the cycle. But we did see I think, you know,
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  Speaker 2: a couple of years ago, we were hearing from businesses
• 1:24
  Speaker 2: that they were sort of weary of getting burnt by
• 1:27
  Speaker 2: the labor shortages that we've had experienced relatively recently, and
• 1:32
  Speaker 2: we're trying to hold on to people. I think it
• 1:34
  Speaker 2: was probably, you know, that was the story up until
• 1:37
  Speaker 2: about a year ago. Since then we have seen that
• 1:40
  Speaker 2: job shedding going on. So again there's probably a bit
• 1:42
  Speaker 2: of catch up and still maybe some more to go
• 1:44
  Speaker 2: there before businesses really feel like they are their right
• 1:47
  Speaker 2: size for the amount of work that's on.
• 1:48
  Speaker 1: And Michael, who is being made unemployed young people grads.
• 1:54
  Speaker 2: That has been the case. I think it's an unusual
• 1:56
  Speaker 2: degree in this cycle. Again, going back to a couple
• 1:59
  Speaker 2: of years ago, the we're a lot of young people
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  Speaker 2: that were brought into the labor force when there were
• 2:03
  Speaker 2: really severe worker shortages, so it was a hot economy.
• 2:06
  Speaker 2: Border was closed so you couldn't get mirgrant workers, and
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  Speaker 2: so a lot of people were actually who were already
• 2:11
  Speaker 2: in study were being brought into work as well. Now
• 2:14
  Speaker 2: we're seeing the reverse of that. A lot of these
• 2:16
  Speaker 2: people are, you know, they're either out of work or
• 2:19
  Speaker 2: not able to find a job in the first place.
• 2:21
  Speaker 2: In many cases, they're just concentrating on their studies and
• 2:24
  Speaker 2: they're not counting towards the ranks of the actively unemployed.
• 2:27
  Speaker 2: They just get counted as not in the workforce.
• 2:30
  Speaker 1: Michael, does it feel like every time you talk to
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  Speaker 1: one of us journos that you are saying it will
• 2:35
  Speaker 1: get better soon, it will peak, you know, and it's
• 2:38
  Speaker 1: going to peak soon, and it's going to be over soon,
• 2:40
  Speaker 1: and it keeps getting dragged out.
• 2:42
  Speaker 2: Yeah. Yeah, there's definitely a cry of are we there
• 2:45
  Speaker 2: yet that's been going for a while. I Mean, a
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  Speaker 2: key part of managing the cycle really lies with the
• 2:51
  Speaker 2: Reserve Bank. They you know, they have done a lot
• 2:56
  Speaker 2: the big part of their job in terms of lowering
• 2:58
  Speaker 2: interest rates. It's taking some time to feed through into
• 3:02
  Speaker 2: what borrowers are actually paying and then hopefully sort of
• 3:04
  Speaker 2: freeing up some cash for them to do something less.
• 3:07
  Speaker 2: We kind of knew it was going to be a
• 3:09
  Speaker 2: gradual pace, given that the timing of when people would
• 3:12
  Speaker 2: be able to move on to those lower re interest rates.
• 3:14
  Speaker 2: But yeah, I can always feel very drawn out when
• 3:16
  Speaker 2: you're talking about something that's you know, you know it's
• 3:18
  Speaker 2: going to take a year or so, and you're having
• 3:20
  Speaker 2: to talk about it every day.
• 3:23
  Speaker 1: I feel like you've summed it up perfectly there, Michael,
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  Speaker 1: Thank you. Michael, Gordon Whispac Senior Economists. For more from
• 3:29
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• 3:33
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• 3:35
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