Mark Smith: ASB Senior Economist on the unemployment rate due out today

Mixed opinions on when unemployment will reach its peak. 

Stats NZ data out this morning is predicted to show rates increased to around 5.2% during the March quarter. 

ANZ Chief Economist Sharon Zollner expects this will likely be as high as it will go. 

While ASB senior economist Mark Smith told Ryan Bridge it could be a bit higher later in the year. 

He says they've seen firms hold back on hiring as disruptions to trade and economic concerns continue. 

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Episode Transcript

Speaker 1 (00:00):
Employment number out today, Reserve Bank expecting an increase from
five point one to five point two. That's equal to
peak lockdown numbers. Mark Smith is ASB Senior economists with
US Mark.

Speaker 2 (00:11):
Good morning, Good morning, Ryan.

Speaker 1 (00:13):
So you're siding with the Reserve Bank, right, Yeah.

Speaker 2 (00:17):
We're at five point two, but it can easily be
higher than that.

Speaker 1 (00:21):
Does it matter?

Speaker 2 (00:23):
It does matter. What it really shows is that the
economy has gone through a very difficult period. So over
the last twelve months or so, the economy on net
has lost more than thirty thousand jobs. Now, a lot
of those job losses have been concentrated for the very young,
those just joining the labor force, and also for some
secrets like construction and the wider good sector. So yes,

(00:44):
it does matter for those people.

Speaker 1 (00:45):
When do you see because the economists is split on
when it peaks. When do you think it will peak?

Speaker 2 (00:52):
Yeah, that's a bigger knowing. There's a lot of fact
it's determining the numployment rate. Now we're hoping that that
freight will start moving low by the end of the year.
But what's been happening is recently with a lot of
trade disruptions and concerns about the economy, we'd actually see
firms hold back on hiring, and if anything, that unemployment
rate could get a little bit higher.

Speaker 1 (01:11):
Still, we're still not even seeing job I mean we're
not that they have been increasing, but we're not seeing
job ads go boom yet, either, are we.

Speaker 2 (01:20):
Yeah no, that's right. They are still well down on
where that were a while or so ago. Now we're
hoping to see the economy start to sort of sort
of ride itself towards in the year. But what could happen, though,
is if the economy remains weak for longer than than hoped,
we'd actually see the Reserve Bank revivable stimulus and what
they're previously indicated, if anything, the official cash rate at

(01:42):
full below three percent for the end of the year.

Speaker 1 (01:44):
Yeah, yeah, I think you might be right there.

Speaker 2 (01:47):
Now.

Speaker 1 (01:47):
Supply demand obviously for labor effects the price you pay
for it, so don't expect the big pay rise this year.

Speaker 2 (01:53):
Yeah, that's right. If anythink labor cost or roads, wage
growth will get the lowest in at least three years.
And what we were really thing is pretty sharp accelerations
and those and those wage increases. So the power, if
you like, the Biden power still from the favor employers,
and what they're doing is making you sure that you know,
with inflation falling, the need for wage increases, certainly not there.

Speaker 1 (02:16):
Appreciate your thoughts. Mark Mark Smith ASB Senior Economists with
us this morning. For more from earlier edition with Ryan Bridge,
listen live to News Talks it'd be from five am weekdays,
or follow the podcast on iHeartRadio