Brad Olsen: Infometrics Principal Economist on unemployment rising less than expected

Unemployment rose less than expected in the September quarter – from 4.6% to 4.8%. 

This comes slightly below the financial market expectation of 5%.  

Infometrics CEO and Principal Economist Brad Olsen tells Heather du Plessis-Allan there are still a lot of challenges.  

Olsen believes this does not affect any hope of a 75 basis point cut but does create a significant dampener. 

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Episode Transcript

Speaker 1 (00:00):
Unemployments risen from four point six percent to four point
eight percent in the September quarter. This is slightly below
what we were all expecting, including the Reserve Bank and
around five percent infometrics principle economist Brad Olsen is with
us now, Hey, Brad, good evening. Why is it coming
less than expected? Is this because everybody's gone off to was?

Speaker 2 (00:16):
He not? Fully?

Speaker 1 (00:18):
But you're sort of on the right track.

Speaker 2 (00:20):
It's not actually because the labor market is in that
great position are and it's sort of not all bad news.
It's more that we've had a bunch of people that
haven't become what we'd define as unemployed. So we saw
around fourteen thousand fewer people in employment in the September quarter.
Of those fourteen thousand fewer in jobs, only five thousand

(00:40):
were counted as an increase in unemployment. So the remaining
nine thousand or so got into what we call the
not in labor force group, So, for various reasons, are
either not looking for work, they can't find work, they're
not available to start immediately. So although their unemployment number
not quite as high as we might have expected, realistically,
still a lot of challenges out there. Still a difficult

(01:01):
labor market, and looking through the numbers you are starting
to see over the last year definitely more discouragement where
people are not able to find jobs and therefore they're
not looking quite as much.

Speaker 1 (01:10):
Now, how is this going to affect the OCR decision?
Does this totally scrap any hope of a seventy five
basis point cut?

Speaker 2 (01:16):
I don't know if it scraps any hope, but it
sure puts the dabner on it pretty significantly. Not only that,
but we also saw that when we got the labor
cost data that came out, it didn't drop by quite
as much as was expected either. Part of that because
those public sector pay increases still quite substantial. We had
the new police agreement that came into force in the
September quarter. But long story short, I think what it

(01:38):
probably does is that there was a lot of other
pretty weak economic data that's come out over the last
couple of months in similar this labor market data itself
maybe not quite as bad as expected. So fifty still
very much firmly on the table in pole position, but
year right, probably not quite as much expectation now for
that seventy five. It's just not as bad enough to

(01:59):
sort of pull that fire alarm yet.

Speaker 1 (02:01):
No, Hi, Thank you very much. Brad really appreciate it.
Brad awsoon Informetric CEO and principal economists.

Speaker 2 (02:06):
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