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Speaker 1: Unemployment is expected to hit a four year high for

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Speaker 1: the end of last year. This morning will be the

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Speaker 1: last major data release before the OCR decision that's coming

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Speaker 1: out on February the nineteenth. The Reserve Bank is forecasting

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Speaker 1: the unemployment rate to rise from four point eight percent

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Speaker 1: to five point one percent. So I'm joined now by

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Speaker 1: senior economists at the ASB Marx Smith.

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Speaker 2: Good morning to you, Mark, Good morning.

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Speaker 1: Do you reckon it's a five in?

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Speaker 2: It could well be. There is a lot of variability

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Speaker 2: in the numbers, obviously, but what we do know is

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Speaker 2: that the economy has gone through a concerted downturn and

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Speaker 2: the labor market tends to follow.

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Speaker 1: Is this just because of the public sector carts or

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Speaker 1: is this happening across the board.

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Speaker 2: Yeah, it's a lot more broad based than that. But

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Speaker 2: obviously Willington will be acutely feeling the pain. But there

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Speaker 2: are other regions and other groups as well that will

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Speaker 2: be also feeling the brunt of this.

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

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Speaker 2: When you look at the unemployment rates, really the pick

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Speaker 2: up that have been very sizable for the younger age

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Speaker 2: groups that the young cohorts, so Essentially what happens is

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Speaker 2: really the last ones into the labor market typically the

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Speaker 2: first one's out. So really those groups, and you're looking

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Speaker 2: at some effort groups, particularly Pacific Islands and Maudi as well,

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Speaker 2: they really start to feel the bunt from this downturn.

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Speaker 1: What could this do to wage pressure?

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Speaker 2: What we have been seeing is that wage pressures have

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Speaker 2: been really calling the economy. To give you an idea

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Speaker 2: of what's been happening, the economy is likely to lose

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Speaker 2: net thirty thousand jobs over last year. So as the

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Speaker 2: economy is slowed, the demand of labor is called, and

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Speaker 2: labor's demands of labor typically means much core will increase

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Speaker 2: in wages, and that combined with lower inflation, we'll see

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Speaker 2: those increases in wages really shrink from the higher of

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Speaker 2: five to six percent to probably under three percent by

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Speaker 2: the end of the year. And not that really means

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Speaker 2: press is on inflation are likely to call, and I'll

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Speaker 2: be encouraging from an inflation point of view.

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Speaker 1: I mean, if you're waking up and welling to this morning,

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Speaker 1: I just told you about your rateable values falling by

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Speaker 1: a quarter, and now you're hearing that unemployment's bad in

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Speaker 1: that area. Tell me, is there any region that is

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Speaker 1: actually getting good news?

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Speaker 2: Probably typically, though, I think really what we're seeing is

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Speaker 2: a pronounced downtam throughout the economy, but there are some

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Speaker 2: bright spots within that. There are some areas, particularly in

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Speaker 2: provincial areas, where where commodity prices have been strong, produced

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Speaker 2: for terms have been good. But as I said, there

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Speaker 2: are some reasons such as Wellington for example, where the

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Speaker 2: downteam has really been the most acut.

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Speaker 1: Well, all right, Mark, I thank you for your time today.

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Speaker 1: Senior economists at the ASB Marxsmith. For more from earlier

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Speaker 1: edition with Ryan Bridge, listen live to News Talks it'd

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Speaker 1: be from five am weekdays, or follow the podcast on

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Speaker 1: iHeartRadio