Michael Gordon: Westpac Senior Economist on the unemployment rate being expected to hit 5.3%

Unemployment's set to edge higher despite signs of the job market improving. 

Stats NZ data, due out this morning, is expected to show the unemployment rate reached 5.3% in the September quarter. 

That's up from 5.2% in the June quarter. 

Westpac Senior Economist Michael Gordon told Mike Hosking the unemployment rate would be even higher if more young people were in the labour market. 

He says they've been first on the chopping block as the economy slowed, so many have gone back into school and aren't seeking work. 

LISTEN ABOVE 

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
So the job numbers today, which might indicate a couple
of things. One are they up and if so, by
how much? And two is that it is today the
worst of it and jobs being the last cab oft
the old economic turnaround rank? Are we headed for better days?
Michael Gordon, Westpac's senior economists, back with this, Michael, morning,
Good morning. What you got five point three?

Speaker 2 (00:17):
Yeah, we've got five point three. I think, like most
of the market are expecting, we're starting to see a
bit of statilization in the employment numbers. It's encouraging, but
bear in mind we're still getting people coming out of
school coming into the country looking for work. We're not
really doing enough to absorb those people into the workforce
just yet.

Speaker 1 (00:35):
It wasn't too long ago that some people were saying
five point five and I'll never forget that I read sex.
When did that materially change? And do we think five
to two five three is about it?

Speaker 2 (00:45):
Yeah? I think it's been a bit of realization about
the effects of basically participation in the workforce is absorbed
some and essentially it's really come to the younger people
in particular, so as they've been I guess, first on
the chopping block. As the economy slowed, a lot of
them have gone back to school or stayed in school
for longer, so they're showing up in the ranks of

(01:07):
not in the workforce as opposed to actively unemployed and
seeking work.

Speaker 1 (01:10):
These last couple of weeks where we've seen the numbers
of job ads going up, when does that materially feed
through to these sort of numbers we'll see today, I
think it will.

Speaker 2 (01:21):
Take a wee while. I guess while the job ads
have been heading up a little bit, they're still at
a very low level, so there's always some tune that
goes on and so some advertising that's needed. But we're
still kind of at levels of job vacancies that are
not much above tune. So I think we need to
see quite a bit more progress on there.

Speaker 1 (01:39):
And today how lumpy, how industry region all.

Speaker 2 (01:43):
Of that, Well, I think with the number today it's
always lumpy, just because it is a survey, you have
to be a little bit wary of getting some surprises there.
But I think if you look at some of the
other jobs indicators we've had, there's probably a sense of
South Island's doing better than the North Island. Effectively, I
think the kind of the rural influence has some decent

(02:04):
commodity prices at the moment's helping yell exactly.

Speaker 1 (02:06):
So the forecast for next year, you think, as you
sit here talking to us this morning, is what down.

Speaker 2 (02:12):
Yeah, we're expecting it to peak by the end of
this year. For the unemployment rates about five point four
I mean, don't want to be too precise about the
exact decimal place, but we do expect it to improve
somewhat gradually over next year. But getting below I think
five percent marked by the end of next year.

Speaker 1 (02:26):
And the cut coming, assuming there is one of twenty
five points, does that materially play into any of this
or not?

Speaker 2 (02:33):
I think it's I mean, it's all helpful. I think
at this point the kinds of interest rates that people face,
so your morbit rates, deposit rates, business loan rates, and
so on, are baking in that additional twenty five point
cut in the b reserve back. If they did more,
then we might get a bit more movement on those
interest rates and add a bit more juice to the economy.
But at the moment, there seems to be a pretty

(02:55):
well settled opinion in the market that there will be
another twenty five in no end.

Speaker 1 (03:00):
Okay, appreciate your expertise, Michael Gordon, WISPACT cast Senior Economists.
For more from the Mic Asking Breakfast, listen live to
News Talks at B from six am weekdays, or follow
the podcast on iHeartRadio