Numbers hit new high for 11th month in row but forecasts point to gradual cool down
Anet inflow of 3000 migrants in June pushed the annual net gain to 58,300 — the 11th straight month it has hit a new record. Arrivals were 8000 last month pushing the annual tally to a record 115,700, of whom 29,700 were returning New Zealand citizens, just over half of them from Australia. Departures were 5000 for the month and 57,400 for the year, including 35,300 New Zealanders.
There was still a net outflow of 6000 New Zealanders across the Tasman, but that is less than half the previous year and compares with a net loss of 40,000 three years ago.
The net migration gain of 63,900 non-New Zealand citizens over the past year compares with an average of just over 37,000 over the past 10 years and is an increase of 13,500 on the year before.
Most of the increase is explained by an increase in foreign students; student visas issued rose 7700 to 25,800 over the past year. Most of the arriving students were from India (10,100) or China (4900).
Infometrics economist Mieke Welvaert said his seasonal adjustment of visa classifications suggested the number of student arrivals in the June quarter was relatively unchanged from March.
“This plateauing of student arrival numbers is not unexpected. Student arrivals growth during 2014 was largely due to a rule change enabling those on student visas to work more. As a result, this increase was always going to be a level shift.”
The largest category of visa issuance in the year to June remained work visas at 35,200, up 4100 on the year before. The largest source county was the UK (6100).
Westpac economist Felix Delbruck expects net migration to start to slow as the year progresses, but at a gradual pace.
“Reconstruction activity in Canterbury is at a peak and the wider New Zealand economy has come off the boil, which will in time make New Zealand a less attractive destination for migrants. But Australia isn’t yet a compelling alternative destination, with households across the Tasman still very downbeat around job and earning prospects,” Delbruck said.
The Reserve Bank’s June forecasts assumed migrant arrivals would start to decline in the June quarter, and on a net basis halve by early next year. On a seasonally adjusted basis they did decline in the June quarter, by 4.4 per cent.
Delbruck said the June numbers would make little if any difference to the Reserve Bank’s determination to cut the OCR tomorrow.
“Not only have other economic data been overwhelmingly arguing in favour of a lower OCR, but the Re- serve Bank has increasingly been highlighting the role of migrants in easing labour market pressures, rather than boosting demand.”
Deutsche Bank chief economist Darren Gibbs said so far the strong migrant inflow had not proven to be the positive inflation driver that it was during the last upswing in the mid2000s, with increases in labour supply balancing the impact on aggregate demand.
“For as long as this remains the case the Reserve Bank’s policy decisions seem unlikely to be especially sensitive to deviations of net migration from the forecast path.”