NZ: Migration softer but not soft – ANZ

Philip Borkin, Senior Economist at ANZ, notes that a net inflow of 5,500 (sa) migrants was seen in May in New Zealand, which is close to the net inflow recorded over the past three months and a touch below the past six month average (5,660).

Key Quotes

“It is certainly still a strong net inflow in an historical context, although it is below recent highs. In annualised terms, the three month average has eased to 65.4K, from a recent peak of close to 72K, and is the lowest in nine months.

After rising strongly in April, seasonally adjusted PLT departures did fall in May. Departures fell 4.1% m/m after a 7.7% m/m lift in April. They are still up 3.1% on a 3m/3m basis, however. That said, after ‘reverting to type’ and recording a net outflow of migrants to Australia in April (albeit small), Statistics NZ report that a net inflow (of 100 people) was again seen in May. Historically, the relativities between New Zealand and Australia have been a key driver of New Zealand’s migration cycle so this is important to watch.

PLT arrivals are also showing signs of topping out, although they remain elevated. Seasonally adjusted PLT arrivals fell 2.1% m/m in May, which was the fifth fall in the past seven months. Over the past 12 months, arrivals were close to 125k, with the share of New Zealand and Australian citizens (29%) and those on work visas (31%) making up similar shares. Students made up 22% of PLT arrivals.

While there are tentative signs net immigration has peaked, we are not ready to call time on the migration cycle yet. With the New Zealand economy continuing to outperform many international peers and it not grappling with the same polarising political issues as many other countries/regions, it should remain an attractive place for migrants.

Seasonally adjusted visitor arrivals were effectively unchanged in May, with annual growth remaining strong at 9.6%. This strong annual growth is also a relatively broad-based story, with decent lifts in arrivals over the past 12 months from Asia (not just China), the US and Germany. We expect this growth to continue, and for the tourism sector to remain important contributor to the activity growth backdrop more generally. That said, we are watching the impact of the strong NZD closely as it does have the potential to dent average visitor spend.”