Migrants help to keep economy bubbling
Wednesday November 22, 2006
By Brian Fallow

The net inflow of immigrants continued at an above-average clip last month, putting a floor under the economic downturn.

The number of people arriving with the declared intention of staying for at least a year exceeded by 1160 the number of people leaving for at least a year, when adjusted for seasonal effects, Statistics New Zealand reports. That is in line with the average monthly gain over the past year.

The annual tally of just under 14,000 is above the average gain of 10,000 over the past 10 years and also higher than the inflow of "about 12,000" that the Reserve Bank forecast.

ANZ National bank chief economist Cameron Bagrie said net immigration was supporting retail spending and the housing market, which were showing no sign of easing.

"It will be a source of frustration for the Reserve Bank which is looking for a sustained slowdown in consumer spending and the housing market to dampen inflation," he said. But at the same time it would ease some pressure in the labour market by adding to the supply of workers.

Goodman Sachs JBWere economist Shamubeel Eaqub said that 76 per cent of the 13,860 net immigrants over the past year were of working age, which had allowed the working-age population to grow more (1.4 per cent) than the overall population (1.1 per cent).

While there was a net loss of people between 20 and 24 inclusive, there was a net gain in all the other age groups especially of people in their 30s. And while the net loss of people to Australia continues - 20,700 in the year to October - it was offset by net gains from Europe (14,800) and Asia (10,600).

Net migration had been on an improving trend since it troughed in the first half of last year, Eaqub said. "We expect this to provide an important demographic underpinning to the economic slowdown that is evident elsewhere in the economy."

Meanwhile inflation expectations have tumbled in the Reserve Bank's latest quarterly survey. Expectations of inflation one year ahead have dropped to 3 per cent from 3.5 per cent in the previous survey.