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Speaker 1: Jobs dart up today, most economists are picking between four

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Speaker 1: point nine and five point one increase in Principal economist

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Speaker 1: Christina Lyung is back. Well this Christina, good morning to you.

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Speaker 1: Whate a four point nine to five or five point one?

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Speaker 1: What's your care?

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Speaker 2: We're expecting the unemployment rate to pick up to just

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Speaker 2: over five percent in the September quarter. So if we

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Speaker 2: look at other labor market indicators, they do point to

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Speaker 2: a further weakening in hiring. For example, our own ended

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Speaker 2: al quarterly Serve our Business Opinion shows that while firms

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Speaker 2: are starting to feel a bit more optimistic about general

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Speaker 2: economic conditions, certainly when it comes to hiring, there's still

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Speaker 2: quite a bit of caution out there. Over a third

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Speaker 2: of firms reduce heap count in the September quarter, and

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Speaker 2: then around nine percent are indicating that they plan to

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Speaker 2: reduce staff numbers in the next quarter.

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Speaker 1: What's your pick for a peak and when?

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Speaker 2: So, we do expect that the unemployment rate will peak

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Speaker 2: at just under six percent towards the end of next year.

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Speaker 2: It bears to remember that labor market does tend to

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Speaker 2: lag broader economic activity, and that reflects the fact that

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Speaker 2: firms when it comes to once they see that slowing

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Speaker 2: in economic activity. Generally, you do initially see some a

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Speaker 2: bit of labor hoarding going on, particularly where when we

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Speaker 2: look at the just how acute labor shortages have been

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Speaker 2: over the COVID nineteen pandemic period, firms are reluctant to

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Speaker 2: have to go through that again. So it's not until

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Speaker 2: there's actually quite a sustained slowing, which is what we've seen,

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Speaker 2: that firms do start to shed workers and hence you

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Speaker 2: get that slowing, broader slowing in the labor market.

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Speaker 1: Are we seeing variability in the jobs, you know, geographically

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Speaker 1: and industry wise or sector wise.

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Speaker 2: Yeah, So if we look at the slowing in terms

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Speaker 2: of the shedding of workers the labor market, where that

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Speaker 2: weakening is it is fairly brought based. Healthcare is one

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Speaker 2: area where there's been where it's been pretty resilient in

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Speaker 2: terms of jobs and for jobs. But when it comes

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Speaker 2: to for example, professional services and construction, there's been weakening

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Speaker 2: in those areas, and that reflects the impact the negative

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Speaker 2: impact of higher interest rates on demand. Now, higher interest

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Speaker 2: rates over the past year has reduced demand in a

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Speaker 2: lot of areas. For example, when it comes to construction,

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Speaker 2: it's made the feasibility of a lot of development projects

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Speaker 2: no longer feasible because of that high cost to borrow.

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Speaker 2: And generally, when you think about investment, it's the cost

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Speaker 2: of borrowing versus the return on investments. So the fact

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Speaker 2: that with higher interest rates it made it harder to

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Speaker 2: get a lot of those development projects off the ground.

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Speaker 2: We've seen that comes through in weakness and construction demand,

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Speaker 2: and then when it comes to professional services, that reflects

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Speaker 2: that broader US weakening in demand in the news and economy.

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Speaker 1: Good stuff, Christin appreciate very much. Christina lung inst Ieer,

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Speaker 1: Principal Economists. For more from the Mic Asking Breakfast, listen

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