Achieving productivity growth in New Zealand over the next few years will need to come from improving labour productivity rather than growing the population, says ASB Bank.
Net immigration has contributed more than 70 per cent of population growth in recent years but also placed pressure on housing and wider infrastructure according to ASB's Economic Weekly report released yesterday.
Recent data has signalled a slowdown in net migration inflow which is expected to be highlighted in the Statistics New Zealand net migration figures for March, due out today.
Data from February showed a net monthly inflow of less than 5000 people - the lowest in three years.
ASB said with the unemployment rate at a nine-year low, the labour market was tight.
The bank said New Zealand's productivity track record had been poor, but this had been masked by strong population growth.
Its report said capacity constraints could start to slow domestic expansion and with finite resources, increasing the amount produced with the same inputs was the key to boosting per-capita incomes and living standards.
"With the goods terms of trade already the highest since 1950 and with the peak in net permanent and long-term migration looking to be behind us, there are limits to how much more can be gained from these influences in the current cycle," the report said.
"Achieving more growth in the next few years will need to come from strengthening labour productivity."
Slowing net immigration figures were already having an impact on labour shortages with a number of industries struggling to attract and retain staff.
Separate data from Trade Me showed the number of jobs available, particularly in the regions, was up but applications were down.
Southland, Northland, Otago, Hawke's Bay, Waikato and Marlborough all had solid double-digit growth in new listings year-on-year but the average number of applications per role was down 15 per cent compared with last year and down 5.8 per cent on the previous quarter.
Applications in Auckland, Wellington and Canterbury decreased by 17 per cent, 10 per cent and 14 per cent respectively.
The hospitality sector is one such industry facing a labour shortage, and Restaurant Association chief executive Marisa Bidois said businesses relied on a migrant workforce.
"Our industry is still feeling the pinch from the skills shortage across the country, and we're still experiencing that lack of skill set in our industry," Bidois said.
"Our industry is extremely reliant on migrant help particularly in some of the regions, but in Auckland and some of our major centres we've been getting more feedback than usual on how businesses are feeling the struggle to find key staff even more acutely."
The industry had been working on a number of initiatives to encourage workers into the sector but Bidois said sentiment had not changed in that they still needed help from migrant workers to sustain businesses going forward.
ASB predicted net immigration of about 60,000 people in 2018 and 50,000 in 2019.