Latest / Early Edition with Ryan Bridge / Nick Tuffley: ASB Chief Economist ahead of the latest unemployment figures

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Nick Tuffley: ASB Chief Economist ahead of the latest unemployment figures · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: The unemployment numbers out this morning for quarter three, currently
• 0:02
  Speaker 1: sitting at four point six percent, but most economists expecting
• 0:05
  Speaker 1: it to rise to five percent, which would make it
• 0:07
  Speaker 1: the highest since twenty twenty. We also have new household
• 0:11
  Speaker 1: living cost numbers out yesterday, which we'll talk about shortly.
• 0:13
  Speaker 1: Nick Toughley is the TIEF economist at ASB Bank. Nick,
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  Speaker 1: good morning, Good morning, Great to have you on the show.
• 0:20
  Speaker 1: So what do you reckon? What's the number we're looking
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  Speaker 1: for today?
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  Speaker 2: We do think we're going to see employment itself look
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  Speaker 2: less resilient than what it has been and actually fall
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  Speaker 2: about half a percent over this quarter. Now it may
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  Speaker 2: surprise you, but so far during this downturn, employments actually
• 0:37
  Speaker 2: held up and kept growing even if it's slowed to
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  Speaker 2: a core. But things look like they have changed, and
• 0:43
  Speaker 2: as a result, we're expecting a more noticeable jump and
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  Speaker 2: unemployment to around five point one percent, and there reserve
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  Speaker 2: banks expecting something closer to the around five percent as well.
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  Speaker 1: Does that where do you expect it to peak? Because
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  Speaker 1: there was talked midnext year it'd be five point five percent.
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  Speaker 1: Now I'm hearing some people will say six.
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  Speaker 2: We're expecting it will peak a bit over five and
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  Speaker 2: a half percent, but somewhere around that five and a
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  Speaker 2: half six percent range looks about reasonable at this point.
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  Speaker 2: That would still mean it's a lower peak than what
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  Speaker 2: we saw after the global financial crisis, when it was
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  Speaker 2: about six and a half percent and we saw much
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  Speaker 2: larger outright declines and employment.
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  Speaker 1: Okay, so things will still get worse. This is not
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  Speaker 1: our worst number today.
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  Speaker 2: This probably hopefully this will be the last of a
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  Speaker 2: big four. We do think though, that employment does risk
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  Speaker 2: declining towards the end of this year, and we do
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  Speaker 2: have a likely contraction and GDP to come through. But
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  Speaker 2: this is starting to look in the rear vision mirror,
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  Speaker 2: and as we're heading into twenty twenty five, we do
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  Speaker 2: think we'll see growth starting to pick up. So those
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  Speaker 2: green shoots that people have been talking about should be
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  Speaker 2: starting to become noticeable.
• 1:53
  Speaker 1: All right, what number does the Reserve Bank need? They
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  Speaker 1: were predicting five percent for unemployment today, would you know
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  Speaker 1: five percent mean? And I know it's not the simple,
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  Speaker 1: I'll caveat that nick, but would five percent mean of
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  Speaker 1: fifty basis points? You know, would more than five percent mean?
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  Speaker 1: More likely seventy five would less than five percent? Mean
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  Speaker 1: twenty five.
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  Speaker 2: I think if it's somewhere around five percent, give or take,
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  Speaker 2: the Reserve Bank should continue to move at a fifty
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  Speaker 2: point pace at this next meeting. There's a lot of
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  Speaker 2: stuff in there. There's also what's happening with the wage growth,
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  Speaker 2: what is happening with employment itself, That will matter as well.
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  Speaker 2: But I think we're going to need to see substantially
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  Speaker 2: weaker figures. And when I'm saying I'm not, you know,
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  Speaker 2: you're talking about some quite material misses compared to what
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  Speaker 2: Reserve Bank's expecting. For them to move by a larger amount.
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  Speaker 2: Never say never, but I think the Reserve Bank would
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  Speaker 2: be I think fairly comfortable move by fifty basis points
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  Speaker 2: and then slow things down of it next year.
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  Speaker 1: All right, Nick, thank you very much for that. We'll
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  Speaker 1: look at the wage growth numbers shortly. Nick Touughley, chief
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  Speaker 1: economist at ASP Bank. For more from earlier edition with
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  Speaker 1: Ryan Bridge, listen live to Newstalk SETB from five am weekdays,
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  Speaker 1: or follow the podcast on iHeartRadio.