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 …
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Eric Crampton says:
February 5, 2009 at 9:43 am (UTC 12 )
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.
Matt Nolan says:
February 5, 2009 at 9:47 am (UTC 12 )
Sounds like a fair pick for December by iPredicit – I guess we will know for certain in an hour
DanT says:
February 5, 2009 at 11:07 am (UTC 12 )
Matt wrong again….
When are you going to throwin the towel? (kidding!)
Matt Nolan says:
February 5, 2009 at 11:20 am (UTC 12 )
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 …
December unemployment rate of 4.6% | TVHE says:
February 5, 2009 at 11:19 am (UTC 12 )
[...] unemployment rate rose to 4.6% – definitely on the low end of my expected distribution. However, the participation rate rose to an all time high and employment rose 0.9%. This was [...]
Unemployment rate will be …. | TVHE | Fund Loans - Unemployment Insurance says:
February 6, 2009 at 1:37 am (UTC 12 )
[...] more here: Unemployment rate will be …. | TVHESHARETHIS.addEntry({ title: “Unemployment rate will be …. | TVHE”, url: [...]