Jarrod Kerr: Kiwibank Chief Economist on the unemployment rate reaching 4.6 percent

Kiwibank's Chief Economist says unemployment will rise for another year.

Stats NZ figures out today show unemployment jumped to 4.6 percent in the June quarter, from 4.4 the quarter before, and 3.6 percent this time last year.

Jarrod Kerr says this statistic tends to lag behind the rest of the economy, because employers keep workers as long as they can.

"So we think the unemployment rate keeps lifting for the rest of this year and into next - and it'll end up around 5.2-5.3 percent."

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
Together do for see Ellen.

Speaker 2 (00:02):
The unemployment rate has risen to four point six. It's
slightly better than most forecasters had predicted. At four point seven,
it's bang in line with the Reserve Banks for forecast.
Jared kurz Ki Banks chief economist, Hey, Jared, Hey, right,
this is this has hit the young ones particularly hard,
as it always does, isn't it.

Speaker 1 (00:18):
Yeah it has. We've seen a list of unemployment and
unfortunately it's the younger people who have been hit first.

Speaker 2 (00:25):
Wage inflation though still going up. That's a good thing
for people, isn't it. Yeah it is.

Speaker 1 (00:30):
But then if you ask them, you know, are you
working enough? Saying no, we want more hours. So the
under utilization rate rose. So people are working, but they're
just not getting the hours they want. How much longer
that's a reflection? Sorry, no, carry on. I was just
going to say, and that's a reflection of you know,
firms cutting hours rather than heads at the stage.

Speaker 2 (00:50):
Yeah, I mean, we are nowhere near where we're going
with the unemployment rate. So how much longer have we
got for this thing to kind of play out?

Speaker 1 (00:57):
Oh? We've got another year. The unemployment rate does lag.
What's happening in the economy. Businesses do hold on to
workers for as long as they can, So we think
the unemployment rate keeps lifting for the rest of this
year and into next and it'll end up around five
point two five point three percent.

Speaker 2 (01:14):
What do you think this means for the decision next
week on the official cash rate?

Speaker 1 (01:18):
Look, I recommend this central bank cut rates next week.
And I say that because we've seen enough in the
data to be confident that inflation's not only going to
be below three percent this year, but it'll be back
to two percent next year. And when they set policy today,
they're actually setting policy for the end of next year.

(01:39):
That's how long it takes to feed through. It's cut
now for relief next year.

Speaker 2 (01:44):
Jared, what about the immediate reaction though? I mean at
the minute that they can't, people are going to feel
freer and start to spend. It might not be massive,
but it will change our attitudes. Right, So could it
potentially fire up the inflation just.

Speaker 1 (01:55):
To weave it oh a little bit? And I think
that's kind of what we want. The economy has been
in recession for nearly two years. I think it is
time to try and lift people's heads. I think it
is time to try and boost confidence, get people investing,
get people looking for growth again. You know, businesses are
shell shocked and they keep saying that they're trying to

(02:18):
survive until twenty five. And I don't like that mindset.
I want people lifting their heads again and looking for growth.

Speaker 2 (02:24):
Yeah, Jared, listen, Thank you very much. Always appreciated. Jared Kirkie,
we Banks Chief Economists. For more from Heather Duplessy Allen Drave,
listen live to news talks he'd be from four pm weekdays,
or follow the podcast on iHeartRadio