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Michael Gordon: Westpac Senior economist on the expectation the unemployment rate will hold steady at 5.3% · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: We get the first job market stats of the year today,
• 0:03
  Speaker 1: most major banks are expecting unemployment to hold steady five
• 0:06
  Speaker 1: point three percent. That's because well wage growth expected to
• 0:09
  Speaker 1: remain subdued, still lagging inflation. Michael Gordon, Westpac senior economists
• 0:13
  Speaker 1: with me this morning. Michael, good morning.
• 0:16
  Speaker 2: Good morning.
• 0:17
  Speaker 1: What's your pick.
• 0:19
  Speaker 2: Yeah, like, as you said, with a lot of the
• 0:22
  Speaker 2: other banks were expecting the unemployment at the Old City,
• 0:24
  Speaker 2: it's five point three. We saw through some of the
• 0:28
  Speaker 2: nice monthly jobs numbers we get from stats. Now there's
• 0:30
  Speaker 2: the bit of jobs growth coming through, but at the
• 0:33
  Speaker 2: moment it's just enough to stabilize the unemployment rate rather
• 0:36
  Speaker 2: than help to bring it down again. That's probably more
• 0:38
  Speaker 2: story as we get into twenty twenty six.
• 0:40
  Speaker 1: When does that start to turn.
• 0:43
  Speaker 2: I think at the moment we're expecting that to probably
• 0:46
  Speaker 2: start to happen by midyear and then sort of improving
• 0:49
  Speaker 2: over the course of the next year or so. Usually
• 0:52
  Speaker 2: jobs lag a bit from the broader economic cycle. So
• 0:55
  Speaker 2: we've had I mean, how far are we into the
• 0:57
  Speaker 2: economic upturn We've had. We had one good quarter reporter,
• 1:01
  Speaker 2: we're expecting another one to decend the quarter. So it's
• 1:04
  Speaker 2: probably a process that's sort of started to happen. It's
• 1:07
  Speaker 2: three to six months after that.
• 1:08
  Speaker 1: Meanwhile, across the Tasman they're overheating.
• 1:12
  Speaker 2: Yeah. So we had the Reserve Bank in Australia raised
• 1:15
  Speaker 2: interest rates yesterday. I think to understand that, you've really
• 1:19
  Speaker 2: got to go back to I guess the history of
• 1:21
  Speaker 2: the last few years when everyone is raising interest rates. Australia,
• 1:25
  Speaker 2: they really made a choice to do the minimum required
• 1:28
  Speaker 2: to get inflation back into their target and try to
• 1:30
  Speaker 2: preserve jobs and growth, and they did that really well,
• 1:34
  Speaker 2: but it meant they were going to have no wiggle
• 1:35
  Speaker 2: room when things started to heat up again. In New Zealand,
• 1:38
  Speaker 2: the Reserve Bank went a bit harder on inflation and
• 1:41
  Speaker 2: the economy suffered. But it means that they do have
• 1:43
  Speaker 2: more wiggle rooms. They're not as under as much pressure
• 1:46
  Speaker 2: to start raising rates again as inflation started to pick up.
• 1:49
  Speaker 1: And what is worse, Michael, what they've done or what
• 1:52
  Speaker 1: we've done, because the thought, just the thought of it
• 1:55
  Speaker 1: coming back again like this monster that hides under your
• 1:59
  Speaker 1: bed and then leaps out whenever things get a little
• 2:03
  Speaker 1: too hot. It's just frightening because we know how inflation
• 2:08
  Speaker 1: robs you and steals your wages. So what's worse what
• 2:12
  Speaker 1: we've done on what they're doing.
• 2:14
  Speaker 2: Well, it's a great question, and I think again i'd
• 2:16
  Speaker 2: emphasize it's been a choice that the respective countries have made,
• 2:21
  Speaker 2: and even I think even as a little six months ago,
• 2:23
  Speaker 2: I still heard a lot of people saying Australia had
• 2:25
  Speaker 2: made the better choice. And they may be thinking like,
• 2:28
  Speaker 2: it looks like the worst choice now, but I think
• 2:30
  Speaker 2: you've rarely got to look at it over the course
• 2:32
  Speaker 2: of this whole up and down cycle. So you know,
• 2:37
  Speaker 2: I think we're probably still not at the stage where
• 2:38
  Speaker 2: we can judge which one made the better choice, but
• 2:41
  Speaker 2: certainly at the moment that the tides a sort of
• 2:43
  Speaker 2: starting to shift a bit more in our FATA.
• 2:45
  Speaker 1: Yeah, Michael, appreciate that. Michael Gordon, Westpac Senior Economist.
• 2:49
  Speaker 2: For more from Early Edition with Ryan Bridge.
• 2:51
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• 2:55
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