1 00:00:00,880 --> 00:00:03,520 Speaker 1: We get the first job market stats of the year today, 2 00:00:03,560 --> 00:00:06,280 Speaker 1: most major banks are expecting unemployment to hold steady five 3 00:00:06,320 --> 00:00:09,160 Speaker 1: point three percent. That's because well wage growth expected to 4 00:00:09,200 --> 00:00:13,800 Speaker 1: remain subdued, still lagging inflation. Michael Gordon, Westpac senior economists 5 00:00:13,800 --> 00:00:16,280 Speaker 1: with me this morning. Michael, good morning. 6 00:00:16,960 --> 00:00:17,520 Speaker 2: Good morning. 7 00:00:17,600 --> 00:00:18,160 Speaker 1: What's your pick. 8 00:00:19,560 --> 00:00:22,000 Speaker 2: Yeah, like, as you said, with a lot of the 9 00:00:22,040 --> 00:00:24,440 Speaker 2: other banks were expecting the unemployment at the Old City, 10 00:00:24,480 --> 00:00:27,640 Speaker 2: it's five point three. We saw through some of the 11 00:00:28,200 --> 00:00:30,600 Speaker 2: nice monthly jobs numbers we get from stats. Now there's 12 00:00:30,600 --> 00:00:33,000 Speaker 2: the bit of jobs growth coming through, but at the 13 00:00:33,040 --> 00:00:36,040 Speaker 2: moment it's just enough to stabilize the unemployment rate rather 14 00:00:36,040 --> 00:00:38,040 Speaker 2: than help to bring it down again. That's probably more 15 00:00:38,120 --> 00:00:40,040 Speaker 2: story as we get into twenty twenty six. 16 00:00:40,240 --> 00:00:41,480 Speaker 1: When does that start to turn. 17 00:00:43,560 --> 00:00:46,520 Speaker 2: I think at the moment we're expecting that to probably 18 00:00:46,520 --> 00:00:49,519 Speaker 2: start to happen by midyear and then sort of improving 19 00:00:49,640 --> 00:00:52,559 Speaker 2: over the course of the next year or so. Usually 20 00:00:52,720 --> 00:00:55,880 Speaker 2: jobs lag a bit from the broader economic cycle. So 21 00:00:55,880 --> 00:00:57,400 Speaker 2: we've had I mean, how far are we into the 22 00:00:57,480 --> 00:01:01,520 Speaker 2: economic upturn We've had. We had one good quarter reporter, 23 00:01:01,760 --> 00:01:04,640 Speaker 2: we're expecting another one to decend the quarter. So it's 24 00:01:04,640 --> 00:01:07,120 Speaker 2: probably a process that's sort of started to happen. It's 25 00:01:07,160 --> 00:01:08,280 Speaker 2: three to six months after that. 26 00:01:08,880 --> 00:01:10,840 Speaker 1: Meanwhile, across the Tasman they're overheating. 27 00:01:12,680 --> 00:01:15,279 Speaker 2: Yeah. So we had the Reserve Bank in Australia raised 28 00:01:15,319 --> 00:01:19,920 Speaker 2: interest rates yesterday. I think to understand that, you've really 29 00:01:19,959 --> 00:01:21,720 Speaker 2: got to go back to I guess the history of 30 00:01:21,720 --> 00:01:24,880 Speaker 2: the last few years when everyone is raising interest rates. Australia, 31 00:01:25,080 --> 00:01:28,840 Speaker 2: they really made a choice to do the minimum required 32 00:01:28,880 --> 00:01:30,920 Speaker 2: to get inflation back into their target and try to 33 00:01:30,920 --> 00:01:33,600 Speaker 2: preserve jobs and growth, and they did that really well, 34 00:01:34,160 --> 00:01:35,520 Speaker 2: but it meant they were going to have no wiggle 35 00:01:35,600 --> 00:01:38,280 Speaker 2: room when things started to heat up again. In New Zealand, 36 00:01:38,440 --> 00:01:41,240 Speaker 2: the Reserve Bank went a bit harder on inflation and 37 00:01:41,280 --> 00:01:43,399 Speaker 2: the economy suffered. But it means that they do have 38 00:01:43,520 --> 00:01:46,520 Speaker 2: more wiggle rooms. They're not as under as much pressure 39 00:01:46,520 --> 00:01:49,080 Speaker 2: to start raising rates again as inflation started to pick up. 40 00:01:49,160 --> 00:01:52,280 Speaker 1: And what is worse, Michael, what they've done or what 41 00:01:52,320 --> 00:01:55,600 Speaker 1: we've done, because the thought, just the thought of it 42 00:01:55,680 --> 00:01:59,160 Speaker 1: coming back again like this monster that hides under your 43 00:01:59,160 --> 00:02:03,080 Speaker 1: bed and then leaps out whenever things get a little 44 00:02:03,080 --> 00:02:07,880 Speaker 1: too hot. It's just frightening because we know how inflation 45 00:02:08,360 --> 00:02:12,120 Speaker 1: robs you and steals your wages. So what's worse what 46 00:02:12,160 --> 00:02:13,440 Speaker 1: we've done on what they're doing. 47 00:02:14,800 --> 00:02:16,919 Speaker 2: Well, it's a great question, and I think again i'd 48 00:02:16,919 --> 00:02:21,440 Speaker 2: emphasize it's been a choice that the respective countries have made, 49 00:02:21,480 --> 00:02:23,720 Speaker 2: and even I think even as a little six months ago, 50 00:02:23,760 --> 00:02:25,640 Speaker 2: I still heard a lot of people saying Australia had 51 00:02:25,639 --> 00:02:28,360 Speaker 2: made the better choice. And they may be thinking like, 52 00:02:28,440 --> 00:02:30,000 Speaker 2: it looks like the worst choice now, but I think 53 00:02:30,040 --> 00:02:32,680 Speaker 2: you've rarely got to look at it over the course 54 00:02:32,760 --> 00:02:37,080 Speaker 2: of this whole up and down cycle. So you know, 55 00:02:37,080 --> 00:02:38,600 Speaker 2: I think we're probably still not at the stage where 56 00:02:38,639 --> 00:02:41,120 Speaker 2: we can judge which one made the better choice, but 57 00:02:41,200 --> 00:02:43,239 Speaker 2: certainly at the moment that the tides a sort of 58 00:02:43,240 --> 00:02:44,959 Speaker 2: starting to shift a bit more in our FATA. 59 00:02:45,120 --> 00:02:48,200 Speaker 1: Yeah, Michael, appreciate that. Michael Gordon, Westpac Senior Economist. 60 00:02:49,040 --> 00:02:51,320 Speaker 2: For more from Early Edition with Ryan Bridge. 61 00:02:51,400 --> 00:02:54,840 Speaker 1: Listen live to News Talks it be from five am weekdays, 62 00:02:55,080 --> 00:02:57,120 Speaker 1: or follow the podcast on iHeartRadio.