Mark Smith: ASB Senior Economist on New Zealand's unemployment data

An economist says some groups of people will be hit harder by rising unemployment.

The country's labour market data for the final quarter of 2024 will be released this morning. 

Most experts predict the unemployment rate will rise from 4.6-percent to about 5-percent. 

ASB senior economist Mark Smith told Andrew Dickens the Wellington region's likely to be heavily impacted

He says it picks up in the younger age group, because what typically happens is the last ones into the labour market are the first ones out.

Smith says some ethnic groups will also be effected, like Maori and Pacific Islanders.

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Episode Transcript

Speaker 1 (00:00):
Unemployment is expected to hit a four year high for
the end of last year. This morning will be the
last major data release before the OCR decision that's coming
out on February the nineteenth. The Reserve Bank is forecasting
the unemployment rate to rise from four point eight percent
to five point one percent. So I'm joined now by
senior economists at the ASB Marx Smith.

Speaker 2 (00:22):
Good morning to you, Mark, Good morning.

Speaker 1 (00:24):
Do you reckon it's a five in?

Speaker 2 (00:25):
It could well be. There is a lot of variability
in the numbers, obviously, but what we do know is
that the economy has gone through a concerted downturn and
the labor market tends to follow.

Speaker 1 (00:37):
Is this just because of the public sector carts or
is this happening across the board.

Speaker 2 (00:41):
Yeah, it's a lot more broad based than that. But
obviously Willington will be acutely feeling the pain. But there
are other regions and other groups as well that will
be also feeling the brunt of this.

Speaker 1 (00:53):
Okay, so who's hit hardest, who's not getting the jobs?

Speaker 2 (00:57):
When you look at the unemployment rates, really the pick
up that have been very sizable for the younger age
groups that the young cohorts, so Essentially what happens is
really the last ones into the labor market typically the
first one's out. So really those groups, and you're looking
at some effort groups, particularly Pacific Islands and Maudi as well,
they really start to feel the bunt from this downturn.

Speaker 1 (01:18):
What could this do to wage pressure?

Speaker 2 (01:21):
What we have been seeing is that wage pressures have
been really calling the economy. To give you an idea
of what's been happening, the economy is likely to lose
net thirty thousand jobs over last year. So as the
economy is slowed, the demand of labor is called, and
labor's demands of labor typically means much core will increase
in wages, and that combined with lower inflation, we'll see

(01:42):
those increases in wages really shrink from the higher of
five to six percent to probably under three percent by
the end of the year. And not that really means
press is on inflation are likely to call, and I'll
be encouraging from an inflation point of view.

Speaker 1 (01:58):
I mean, if you're waking up and welling to this morning,
I just told you about your rateable values falling by
a quarter, and now you're hearing that unemployment's bad in
that area. Tell me, is there any region that is
actually getting good news?

Speaker 2 (02:10):
Probably typically, though, I think really what we're seeing is
a pronounced downtam throughout the economy, but there are some
bright spots within that. There are some areas, particularly in
provincial areas, where where commodity prices have been strong, produced
for terms have been good. But as I said, there
are some reasons such as Wellington for example, where the

(02:30):
downteam has really been the most acut.

Speaker 1 (02:32):
Well, all right, Mark, I thank you for your time today.
Senior economists at the ASB Marxsmith. For more from earlier
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