Michael Gordon: Westpac Senior Economist on the unemployment rate holding steady at 5.1%

The unemployment rate has come out better than anticipated. 

It remained unchanged at 5.1% in the three months ending March.  

The number of people in full-time work fell by 45 thousand, while the number in part time work grew by 25 thousand. 

Westpac Senior Economist Michael Gordon told Ryan Bridge that people are likely using reduced hours as an alternative to layoffs. 

He says it’s likely one factor as to why the unemployment rate has risen, but not as high as some economists were forecasting. 

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Episode Transcript

Speaker 1 (00:00):
Unemployment five point one percent for quarter one, which is
the same as the quarter before it. No news is
good news because all the economists and the RBNZ for
that matter, thought it to go higher than that. Speaking
of they released their financial stability report yesterday. No major surprises.
We're basically banking on ocr cuts and the price of
milk and meat to get us out of the hole.

(00:20):
Banks are making a profit, which I know, despite what
you think, is a good thing, and should things really
hit the fan with the tariffs, they've got cash to
keep us going. We's PAC senior economist Michael Gordon with
me this morning. Michael, good morning, Good morning. Interesting that
split between full time and part time on the unemployment.

Speaker 2 (00:40):
Yeah, I think it's one of the ways that the
the labor market does flex when you have a downturn,
so to the extent that people are sort of using
reduced hours as an alternative to lay off. It's one
factor why the unemployment rate has risen, But I don't
think it's really risen quite as high as as some
of the people were forecasting.

Speaker 1 (00:59):
Yeah, so what do you do you think that that
is literally the reason that people have switched to part time.

Speaker 2 (01:05):
It does seem to be one of the responses. It's
I mean, we're sort of seeing growth in the number
of part time workers. It's not because of hiring, I
don't think, but it is. There's the useful indication in
terms of where we go from here. I think as
things pick up, businesses are going to be able to
get a bit more out of their existing workers before
they need to start hiring again. So I think that's

(01:26):
why we're seeing the job ads, for instance, I still
pretty low at the moment. Business is not really under
pressure to hire at this stage.

Speaker 1 (01:33):
Do you does this change your opinion of when it
might peak unemployment?

Speaker 2 (01:38):
Yeah, a little bit. I mean I think we are
getting around the peak here. There's always a little bit
of wiggle room around the numbers from quarter to quarter.
But bear in mind we are coming out of a
couple of years where the Reserve Bank was really happy
to put the brakes on the economy to deal with
this quite serious inflation problem, and that's already changed in
the last nine months also, so while it usually takes

(02:02):
some time for the ship to turn around, there is
reason to think that the job situation in the year
ahead should look better than it was from the last
or the previous year or so.

Speaker 1 (02:12):
We had the RBNZ Financial Stability Report out yesterday. What
did you make of it?

Speaker 2 (02:19):
I think there was a there was a little bit
of focus on their comments on the tariff effects. Obviously
that sort of early stages, but it's not really something
that's that's sort of directed at the monetary policy implications
for this, and of course it is still early stages.
We've got the Reserve backed actual monetary policy statement coming

(02:39):
later this month. They'll probably have a bit more thinking
about what this might mean for interest rates here, and
it's it is a tricky one because we're New Zealand's
sort of not really directly in the firing line in
the way that the US Central bankers they're going to
be sort of meant announcing later this morning, and they're
kind of dealing with this fact that it's going to
actually be quite an inflationary effort in the US. At least.

Speaker 1 (03:01):
Appreciate your time, Wiz Pack Senior economist Michael Gordon, Michael,
good to have you on the show. As always. For
more from Early Edition with Ryan Bridge, listen live to
news Talks. It'd be from five am weekdays or follow
the podcast on iHeartRadio,