Unemployment rate will be ….

Everyone agrees that the key number to look out for today will be the unemployment rate – although significant declines in hours worked and employment will also be of interest. There is talk of unemployment reaching 4.7% in the market – I’m a little more pessimistic, but lets just put that to the side. Update: iPredicit is picking 4.8% 1 hour before the data is released.

An unemployment rate with a 5 in front of it will be a negative shock to the market – and would indicate that unemployment has risen very rapidly. Personally I believe that if this recession is really turning into a demand side slump this is what we will see.

An unemployment rate of less than 4.5% would make me very suspicious about where our economy is going. Sure it would still be an increase in unemployment, which isn’t nice. However, 5% is still the “neutral” unemployment rate in our economy. If unemployment is under 4.5% then I would be forced to upwardly revise my view of the NZ economy – and question why the RBNZ has cut rates so far.

Note: The reason I am so pessimistic about unemployment is that, given the growth numbers (and expectations) people are throwing around we would HAVE to see a sharp increase in unemployment. I don’t find call of a 1.3% fall in output and a 6.4% peak in unemployment consistent …

6 replies
  1. Eric Crampton
    Eric Crampton says:

    You’ve checked iPredict’s unemployment stocks, right? There’s trading on Dec.08, Mar.09, … 4.8 is what the market’s saying for Dec.08.

  2. Matt Nolan
    Matt Nolan says:

    I didn’t actually make a pick – I just put forward everyone elses picks 😛

    Although I’ll admit – if this unemployment rate is going to keep increasing this slowly, the argument for a “demand driven” New Zealand recession is weakening …

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