Record migration could boost unemployment

NZ gained a seasonally adjusted 3,500 net new migrants in February, the most since April 2003, and up from 3,100 in January. Photo / Greg Bowker

New Zealand's annual net migration rose to a record in August as Indian and Chinese students continued to flock to courses offered by local educational institutions vying for the lucrative business.

But the rising numbers were "a double-edged sword" according to Westpac senior economist Felix Delbrück, who warned this could contribute to a rise in unemployment.

"We're expecting unemployment to rise over the coming year. The main reason is because the economy is slowing but obviously that's coinciding with continued strong immigration and population growth," he said.
"If the economy slows and labour demand slows that can resolve itself in one of two ways - either you get people leaving the country or if population growth continues you get unemployment rising. It looks like we're going down the second route."

New Zealand had a net gain of 60,300 migrants in the August year, the 13th straight month a record has been set, Statistics New Zealand said. Migrant arrivals rose 13 percent to a record 117,900, while departures fell 5 percent to 57,600.

Foreign students have been a boon to local education businesses, with their contribution growing faster compared to fees generated by local students. In the latest year, student visas rose by 6,400 to 26,800. Of those, 10,600 were from India and 5,100 from China.

Work visas issued climbed by 4,600 to 35,900, with people from the UK the biggest single source at 6,100. Overall, India contributed most to gain in migrant arrivals, at 12,700 in the year, followed by 8,400 from China, 4,500 from the Philippines and 3,800 from the UK.

The decline in migrant departures was mainly due to fewer Kiwis leaving for Australia. Departures of New Zealand citizens to Australia fell 16 percent to 21,600 in the August 2015 year, helping trim the net loss to just 500, the lowest level since 1991. The net outflow to Australia peaked at 40,000 in the August 2012 year.

The surge in migration has been a key counterfactual for the Reserve Bank, which cut the official cash rate a quarter point to 2.75 percent and signalled another cut of that size.

The arrival of migrants has stoked demand, particularly in Auckland, where the overheated property market is seen by the bank as a threat to financial stability.

In the monetary policy statement this month, the bank said it expects migration to begin to soften, although this year the inflow has surpassed its expectations.

Auckland was the biggest recipient of migrants in the latest year, at 27,900, followed by Canterbury on 6,700 and Waikato at 2,300. Half of all migrants to state an address on their arrival card were moving to the Auckland region.

New Zealand welcomed a record 3.02 million short-term visitors in the August 2015 year, up 8 percent from the August 2014 year. Of that, 1.29 million were from Australia, 320,400 from China, and 236,300 from the US, contributing a combined 61 percent of the total.

New Zealand residents also broke records in the August year, departing for a record 2.36 million overseas trips, up 6 percent from the same period a year earlier.

Seasonally adjusted, permanent and long-term net migration was 5,500 in the month of August, down from the record 5,700 in July. A seasonally adjusted net gain of 200 migrants from Australia last month was the highest level since March 1991.