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Speaker 1: We get another look into our job market today, and

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Speaker 1: I wouldn't hold your brief if you're expecting good positive news.

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Speaker 1: Economists reckon unemployment set to hit five point three percent,

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Speaker 1: highest and nine years, up from five point one in

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Speaker 1: the last quarter. Michael Gordon, Westpac senior economists with me

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Speaker 1: this morning. Michael, good morning, Good morning. Is this as

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Speaker 1: bad as it's going to get?

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Speaker 2: I think we're getting towards the end of it, if

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Speaker 2: not necessarily there yet, because the labor market tends to

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Speaker 2: be one of the more lagging parts of the economic cycle.

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Speaker 2: Even as we've seen some signs of better activity this year,

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Speaker 2: it's taken we're not seeing the same a degree of

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Speaker 2: improvement come through in the jobs numbers. Yet we know

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Speaker 2: that hiring is pretty low at the moment, so it's

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Speaker 2: sort of hard to get people out of unemployment if

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Speaker 2: businesses aren't hiring at the moment. So we're thinking probably

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Speaker 2: the peak in the unemployment rate is either around here

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Speaker 2: or slightly higher, But maybe by the end of this

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Speaker 2: year early next year we should see some science of improvement.

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Speaker 1: Okay, what about this idea of labor hoarding where people

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Speaker 1: firms are anticipating things will get better, so you hold

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Speaker 1: on to staff hope, you know, carry them over until

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Speaker 1: things get better. But actually things are taking a long

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Speaker 1: time to get better, so do those people get let

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Speaker 1: go in the meantime?

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Speaker 2: I think there is an element of that already happening.

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Speaker 2: It is again a part of that that lagged aspect

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Speaker 2: of the cycle. But we did see I think, you know,

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Speaker 2: a couple of years ago, we were hearing from businesses

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Speaker 2: that they were sort of weary of getting burnt by

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Speaker 2: the labor shortages that we've had experienced relatively recently, and

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Speaker 2: we're trying to hold on to people. I think it

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Speaker 2: was probably, you know, that was the story up until

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Speaker 2: about a year ago. Since then we have seen that

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Speaker 2: job shedding going on. So again there's probably a bit

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Speaker 2: of catch up and still maybe some more to go

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Speaker 2: there before businesses really feel like they are their right

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Speaker 2: size for the amount of work that's on.

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Speaker 1: And Michael, who is being made unemployed young people grads.

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Speaker 2: That has been the case. I think it's an unusual

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Speaker 2: degree in this cycle. Again, going back to a couple

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Speaker 2: of years ago, the we're a lot of young people

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Speaker 2: that were brought into the labor force when there were

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Speaker 2: really severe worker shortages, so it was a hot economy.

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Speaker 2: Border was closed so you couldn't get mirgrant workers, and

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Speaker 2: so a lot of people were actually who were already

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Speaker 2: in study were being brought into work as well. Now

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Speaker 2: we're seeing the reverse of that. A lot of these

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Speaker 2: people are, you know, they're either out of work or

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Speaker 2: not able to find a job in the first place.

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Speaker 2: In many cases, they're just concentrating on their studies and

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Speaker 2: they're not counting towards the ranks of the actively unemployed.

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Speaker 2: They just get counted as not in the workforce.

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Speaker 1: Michael, does it feel like every time you talk to

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Speaker 1: one of us journos that you are saying it will

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Speaker 1: get better soon, it will peak, you know, and it's

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Speaker 1: going to peak soon, and it's going to be over soon,

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Speaker 1: and it keeps getting dragged out.

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Speaker 2: Yeah. Yeah, there's definitely a cry of are we there

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Speaker 2: yet that's been going for a while. I Mean, a

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Speaker 2: key part of managing the cycle really lies with the

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Speaker 2: Reserve Bank. They you know, they have done a lot

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Speaker 2: the big part of their job in terms of lowering

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Speaker 2: interest rates. It's taking some time to feed through into

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Speaker 2: what borrowers are actually paying and then hopefully sort of

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Speaker 2: freeing up some cash for them to do something less.

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Speaker 2: We kind of knew it was going to be a

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Speaker 2: gradual pace, given that the timing of when people would

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Speaker 2: be able to move on to those lower re interest rates.

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Speaker 2: But yeah, I can always feel very drawn out when

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Speaker 2: you're talking about something that's you know, you know it's

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Speaker 2: going to take a year or so, and you're having

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Speaker 2: to talk about it every day.

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Speaker 1: I feel like you've summed it up perfectly there, Michael,

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Speaker 1: Thank you. Michael, Gordon Whispac Senior Economists. For more from

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