Nicola Willis: Finance Minister on the unemployment rate rising to 4.8%

While there are signs of light at the end of the economic tunnel, the job market is likely to remain tough for a little while yet. 

The unemployment rate has risen to 4.8%. 

It's lower than expected as more people are leaving the labour force, many opting for retraining or retirement instead. 

Finance Minister Nicola Willis told Mike Hosking unemployment is likely to keep rising, as it always lags behind other economic indicators. 

She says it may not go reach the level some of the more pessimistic outlooks have predicted. 

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Episode Transcript

Speaker 1 (00:00):
A couple of things. Won the job's numbers unemployment up

(00:02):
to four point eight not as bad as they thought. Also,
we got the Reserve bank stability report. This week's of
the Finance Minister Nicola willis with us. Very good morning
to you.

Speaker 2 (00:10):
Good morning mate.

Speaker 1 (00:11):
Do you fear Trump and tariffs?

Speaker 2 (00:14):
Look new the olympare's a great relationship with the United States,
and we're looking forward to building a good relationship with
the new Trump administration. Of course, for a trading nation,
we continue to want to grow our trade with the
United States of America and we will look to do so.

Speaker 1 (00:28):
I was saying before the break, They've never been free traders.
We've never had a proper free trade deal with them
under Clinton, Democrats or Republicans. And yet if you look
at the numbers we're selling in there, and we're selling well,
are you hopeful that can continue?

Speaker 2 (00:42):
We'll look out its talks into the States through sixteen
percent in the past year. Do Americans like our wine,
they like our red meat, they like coming here as tourists,
they like our services, and I think that will continue
to be the case. We also like American products, So
trade is ultimately about the exchange of value. That makes
sense on both sides. I think it will continue to

(01:03):
make sense for both of our nations to trade with
each other.

Speaker 1 (01:06):
Right, jobs yesterday four point eight not as bad as
they thought. There is more to come. But I just
wonder if whatever is to come is not going to
be as bad as some might have thought.

Speaker 2 (01:16):
Well, you're right, Treasury was forecasting that inflation would be
at five point two percent by now, or the bank
set it would be five, and it came in at
four point eight. The problems, though, with getting too optimistic
at this point is that inflation is always comes down
and then the economy starts recovering, and then employment is

(01:36):
a lagging factor. So even while the economy is recovering,
unemployment can stick around a bit. So we can expect
it to keep rising a little bit over the next
little while. But yeah, maybe it doesn't go as high
as some of the more pessimistic forecasts we're saying.

Speaker 1 (01:54):
I see your grind for the rest of the year
and maybe into next year. But those who say it
will peak at six I think are wrong. And if
you read the b Thing today this week, which I'm
sure you did, there talk around mortgage stress and that
kind of thing. I just think they're too pessimistic, aren't they.

Speaker 2 (02:09):
Well, look, as I always say, there's mixed things happening
across the economy. What we know is that with interest
rates coming down, that has had some immediate impacts. You've
got such a large group of New Zealanders now with
a mortgage that they're refixing within six months, So you're
going to see an immediate effect coming into the economy
of lower interest rates. That is confidence. You're seeing it

(02:29):
coming through in the business confidence numbers, Mike. People are
still saying, look a bit worried about how the economy
is right now, but feeling very optimistic about next year.
In fact, those numbers that are about ten year high
year ahead optimism. So those are all positive things. We
can see those green shoots coming through. But I am
not going to say that everything is going to be

(02:51):
wonderful yet, because there's always downside risks as well.

Speaker 1 (02:53):
No fair enough, Hey, when are you coming on the
program to tell us all about the future of Key
we Bank.

Speaker 2 (02:59):
A look. I hope to do that later this year.
I haven't taken proposals to cabinet yet, although I do
intend to do that next month and I'm optimistic that
we can come up with something that will allow Kiwibank
to have more capital, that will allow it to grow,
that will bring more competition into retail banking.

Speaker 1 (03:18):
Good stuff. Nice to talk to you, Nichola Willis, Finance Minister.
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