1 00:00:00,120 --> 00:00:02,200 Speaker 1: So jobs Day today, of course another important part of 2 00:00:02,200 --> 00:00:04,640 Speaker 1: the economic story that will help inform the Reserve Bank 3 00:00:04,680 --> 00:00:06,960 Speaker 1: as to whether the misery that they've engineered it has 4 00:00:06,960 --> 00:00:08,520 Speaker 1: done its jobs so they can start to cut the 5 00:00:08,520 --> 00:00:11,840 Speaker 1: cash rate. Senior economists at Westpac Michael Gordon back with us. Michael, 6 00:00:11,880 --> 00:00:14,280 Speaker 1: morning to you. Good morning, your numbers. 7 00:00:14,320 --> 00:00:18,640 Speaker 2: What we're expecting four point seven for today's survey. That's 8 00:00:19,040 --> 00:00:21,360 Speaker 2: coming from four point three percent unemployment great last time. 9 00:00:21,520 --> 00:00:23,520 Speaker 1: And if it's more than four point seven, do we 10 00:00:23,600 --> 00:00:26,360 Speaker 1: panic then think we're heading to recession and the market 11 00:00:26,400 --> 00:00:27,680 Speaker 1: goes into free fall or not. 12 00:00:29,320 --> 00:00:33,080 Speaker 2: Probably not that dramatic from just one number, but I mean, 13 00:00:33,120 --> 00:00:36,519 Speaker 2: certainly I think we are heading towards probably more like 14 00:00:36,600 --> 00:00:38,200 Speaker 2: five and a half at some point by the middle 15 00:00:38,200 --> 00:00:40,840 Speaker 2: of the year. So how today's number comes out probably 16 00:00:40,840 --> 00:00:44,160 Speaker 2: doesn't really change that overall picture, which is a. 17 00:00:43,560 --> 00:00:46,199 Speaker 1: Very important point you make. So as miserable as we 18 00:00:46,240 --> 00:00:48,279 Speaker 1: are about four point six or four point seven, it's 19 00:00:48,320 --> 00:00:50,760 Speaker 1: still got a long way to go, hasn't it. In theory? 20 00:00:52,040 --> 00:00:54,000 Speaker 2: Yeah, I mean, the labor market tends to be one 21 00:00:54,000 --> 00:00:56,760 Speaker 2: of the last shoes to drop in any economic cycle. 22 00:00:56,760 --> 00:00:59,240 Speaker 2: This is really the product of it's almost two years 23 00:00:59,280 --> 00:01:02,160 Speaker 2: now of economy. It's kind of in a slow leak 24 00:01:02,560 --> 00:01:06,000 Speaker 2: and I had a pretty mild impact on unemployment at first, 25 00:01:06,040 --> 00:01:07,520 Speaker 2: but it's really been picking up the pace more in 26 00:01:07,520 --> 00:01:08,440 Speaker 2: the last few quarters. 27 00:01:08,640 --> 00:01:10,840 Speaker 1: You've changed, I mean, I think it was you guys 28 00:01:10,840 --> 00:01:13,280 Speaker 1: who came with Q two and Q three. You're seeing 29 00:01:13,319 --> 00:01:16,360 Speaker 1: some real trouble for the economy. How does the Reserve 30 00:01:16,480 --> 00:01:20,120 Speaker 1: Bank interpret all that we're seeing in this ongoing battle 31 00:01:20,160 --> 00:01:23,480 Speaker 1: between the it's bad enough help us versus not not 32 00:01:23,560 --> 00:01:24,560 Speaker 1: quite bad enough yet? 33 00:01:26,680 --> 00:01:30,560 Speaker 2: Well, I think it'll feed into their forecast when they 34 00:01:30,560 --> 00:01:33,240 Speaker 2: come out next week, and I mean it should ultimately 35 00:01:33,400 --> 00:01:35,880 Speaker 2: mean less inflation pression than they were worrying about. I mean, 36 00:01:35,920 --> 00:01:38,160 Speaker 2: it's really the kind of the homegrown inflation stuff that's 37 00:01:38,200 --> 00:01:42,520 Speaker 2: been worrying them lately. So unfortunately that does mean that so, 38 00:01:42,680 --> 00:01:44,520 Speaker 2: you know, having some weakness in the economy and kind 39 00:01:44,560 --> 00:01:47,240 Speaker 2: of taking that pricing power out is really a key 40 00:01:47,280 --> 00:01:48,920 Speaker 2: part of the formula that they need to see. 41 00:01:49,040 --> 00:01:51,320 Speaker 1: No one's cutting yet, obviously the Fed's got the big 42 00:01:51,320 --> 00:01:53,760 Speaker 1: headline so far this week. Yesterday we had Australia not 43 00:01:53,800 --> 00:01:55,360 Speaker 1: only aren't they cutting, but it's going to be a 44 00:01:55,400 --> 00:01:57,440 Speaker 1: long time before they do. And they've still got hikes 45 00:01:57,480 --> 00:02:00,560 Speaker 1: on the table. How out of sinc are we or 46 00:02:00,640 --> 00:02:02,200 Speaker 1: are they all individual stories? 47 00:02:03,360 --> 00:02:05,640 Speaker 2: I think everyone's sort of running at their own pace 48 00:02:05,680 --> 00:02:08,359 Speaker 2: at the moment. So there's been a couple I think 49 00:02:08,800 --> 00:02:12,799 Speaker 2: Canada has cut a couple of times, the UK's reluctantly 50 00:02:12,840 --> 00:02:15,160 Speaker 2: cut once. They're all kind of in different positions in 51 00:02:15,280 --> 00:02:18,680 Speaker 2: terms of how close inflation is to those targets that 52 00:02:18,720 --> 00:02:23,760 Speaker 2: they need to see. We are, unfortunately still at towards 53 00:02:23,760 --> 00:02:25,840 Speaker 2: the higher end of that range. So we haven't had 54 00:02:25,880 --> 00:02:29,520 Speaker 2: nearly as much success as the likes of Canada as 55 00:02:29,760 --> 00:02:30,600 Speaker 2: for instance, has done. 56 00:02:30,880 --> 00:02:34,720 Speaker 1: So has anything materially changed in your view? Recut So 57 00:02:34,760 --> 00:02:36,799 Speaker 1: we're still you're still thinking towards the end of the year. 58 00:02:38,600 --> 00:02:41,720 Speaker 2: So we have cuts starting from the October meeting and 59 00:02:41,760 --> 00:02:44,799 Speaker 2: then another one in November. So that's the that's the 60 00:02:44,880 --> 00:02:47,960 Speaker 2: last opportunity of the year. We have been bringing that 61 00:02:48,040 --> 00:02:50,600 Speaker 2: timing forward just to reflect the way that the data 62 00:02:50,600 --> 00:02:52,639 Speaker 2: has been turning out. And I think certainly if you're 63 00:02:52,680 --> 00:02:56,120 Speaker 2: kind of looking at the highest frequency stuff like we do, 64 00:02:56,960 --> 00:02:59,919 Speaker 2: there was probably sort of a turn towards the worst 65 00:03:00,080 --> 00:03:04,359 Speaker 2: has come more recently to like some of these June numbers. 66 00:03:03,560 --> 00:03:07,720 Speaker 2: It's not really that easy to to sort of figure 67 00:03:07,720 --> 00:03:10,320 Speaker 2: out what, you know, what is driving that first, because 68 00:03:10,320 --> 00:03:12,440 Speaker 2: it's been quite sudden and it can just be noised. 69 00:03:12,440 --> 00:03:14,880 Speaker 2: But yeah, certainly, just we've kind of noticed more recently 70 00:03:14,919 --> 00:03:16,519 Speaker 2: things have taken a bit of a turn for the worse. 71 00:03:16,639 --> 00:03:20,040 Speaker 1: Would you expect Adrian to note that next week if 72 00:03:20,080 --> 00:03:22,440 Speaker 1: what he sees is what you see, because he's not 73 00:03:22,480 --> 00:03:24,280 Speaker 1: cutting till next year apparently officially. 74 00:03:25,960 --> 00:03:29,960 Speaker 2: Well, I think in their last statement last month, without 75 00:03:30,000 --> 00:03:32,560 Speaker 2: putting any numbers around it, there's certainly indicative in words 76 00:03:32,560 --> 00:03:35,640 Speaker 2: that they'd come off that view. You know, then they'll 77 00:03:35,680 --> 00:03:38,360 Speaker 2: be having their discussions at the moment and running through 78 00:03:38,360 --> 00:03:40,720 Speaker 2: some of that recent data, So I don't think they're 79 00:03:40,760 --> 00:03:42,480 Speaker 2: really going to be too far from what we're thinking 80 00:03:42,520 --> 00:03:42,960 Speaker 2: at the moment. 81 00:03:43,000 --> 00:03:45,480 Speaker 1: Good stuff, Michael, appreciate your expertise as always, Michael Gordon, 82 00:03:45,480 --> 00:03:49,040 Speaker 1: Westpac SENI your Economists. For more from the Mic Asking Breakfast, 83 00:03:49,200 --> 00:03:52,520 Speaker 1: listen live to news talks they'd be from six am weekdays, 84 00:03:52,760 --> 00:03:54,800 Speaker 1: or follow the podcast on iHeartRadio.