Jarrod Kerr: Kiwibank chief economist on employment numbers holding steady in latest report

Overall employment's held steady - but the hours people work have notably contracted.

In figures out today, the unemployment rate remained unchanged at 5.1 percent in the three months ending March. 

But total hours worked are down three percent over the year. 

Kiwibank chief economist Jarrod Kerr says numbers of part time workers are rising, with those working full-time falling. 

"Businesses are clearly cutting hours to reduce costs and fight their way through what's quite an awkward period, and that's weighing on households."

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Episode Transcript

Speaker 1 (00:00):
Good afternoon. We have some good news on the employment front.
Despite expectations that the unemployment rate would go up, but
it's actually come and unchanged for the first three months
of the year at five point one percent. Jared kurt
Is Kiwibank's chief economist.

Speaker 2 (00:11):
Ay, Jared, Hey, how are you very well?

Speaker 1 (00:14):
Thank you? So can we put this down to people
not losing their jobs, but just taking fewer hours instead.

Speaker 2 (00:20):
Yes, exactly, that's the main message. It's great that people
aren't losing their jobs, but total hours worked is down
three percent over the year, so that's quite a contraction.

Speaker 1 (00:31):
I see that we have about twenty one percent of
the people who are in the workforce actually in part
time work. Does that seem like a high number to you?

Speaker 2 (00:37):
Yeah, it is. We've seen part time work increasing as
full time work is decreasing, So businesses are clearly cutting
hours to reduce costs and fight their way through what's
quite an awkward period. And that's weighing on households, and
some households are struggling.

Speaker 1 (00:58):
Can we just assume that the hours will go up
again as the economy picks up.

Speaker 2 (01:03):
Yeah, and we really do need to see the economy
bounce back, and we think that happens over the second
half the year and into next year. So things will
get better, but it does take time and it will
take time for the labor market to strengthen.

Speaker 1 (01:19):
Do you think that this is the height of what
we were going to reach? Like, it's not going to
go up later. We haven't delayed it.

Speaker 2 (01:23):
This is it we're hoping that's the case. I mean,
our forecast was for an unemployment rate to reach about
five point three five point four. Sitting at five point
one is obviously better than that, but it is a
big lift from the three point two where we're at
it a year or so ago. If we peak this year,
then I think we'll see the unemployment rate falling over

(01:46):
twenty twenty six, which will be good news for many.

Speaker 1 (01:49):
So how do you think this is going to affect
the Reserve banks decision on the ocr later in the month.

Speaker 2 (01:55):
Look, we are sitting here having been through a deep recession,
with a rising unemployment rate, falling hours, all these indicators,
and the Reserve Bank still has interest rates at restrictive
levels by still restraining the economy. It's not needed. They
should be cutting aggressively. Two and a half we're at

(02:18):
three and a half. At the moment we were at
five and a half. We've had a decent move, but
we've got to get below three percent, which is the
believed neutral rate.

Speaker 1 (02:28):
Jared is good to talk to you. Thank you so much,
Jared Kerchief Economist a Kiwibank. For more from Heather Duplessy
Allen Drive, listen live to news Talks. It'd be from
four pm weekdays, or follow the podcast on iHeartRadio.