Net migration doubles in January from a year ago, but NZers starting to leave again (Update 2)

Permanent long term (PLT) arrivals exceeded departures by 1,950 on a seasonally adjusted basis in January, up from 1,720 in December 2009, Statistics NZ figures show. Actual net migration of 2,539 in January was more than double the 1,204 seen in January a year earlier and at its highest level since 2004. However, the trend of emigration by New Zealanders has turned in the last three months, raising fears another exodus of Kiwis to Australia is about to begin as wages rise and jobs are offered across the Tasman. (Update 1 includes comments from ASB economist Jane Turner). Net migration has surged to six year highs in the last year as fewer New Zealanders left to live in Australia and more New Zealanders returned from overseas, although actual arrivals of non-New Zealand migrants has fallen in the last year. This surge in net migration has been cited by some in the rebound in house prices between March 2009 and December 2009. Total net migration in the year to January was 22,588, up from 4,538 in the year to January 2009 as departures slumped by more than 20,000, more than offsetting a fall in arrivals of around 2,000. Arrivals of New Zealand citizens returning rose to 26,323 in the year to January from 23,808 the previous year. See the full release here:

PLT arrivals exceeded departures by 2,500 in January 2010, compared with 1,200 in January 2009. This is the highest net gain for a January month since 2004 (4,000). The increase was driven by 1,700 (30 percent) fewer PLT departures to Australia. PLT arrivals overall were down 400 from January 2009, although there were 200 more PLT arrivals of New Zealand citizens. On a seasonally adjusted basis, PLT arrivals exceeded departures by 2,000 in January 2010, up from 1,700 in December 2009, and similar to the average of 1,900 experienced since February 2009. In January 2010, there were net inflows of migrants from the United Kingdom (1,100), India, and China (each 400). There was a net outflow of 2,100 PLT migrants to Australia, the lowest for a January month. Visitor arrivals numbered 256,700 in January 2010, the highest total recorded for a January month, Statistics New Zealand said today. The number of international visitors increased by 12,600 (5 percent) from January 2009. The main contributor to the increase was more visitors from Australia (up 13,000 or 16 percent), continuing the large increases seen since April 2009. According to figures from the Australian Bureau of Statistics, Australians departed on 8 percent more overseas trips in the last year. Visitors from Korea increased 1,900 in January 2010, but remained less than half the January month peak seen in 2004. Similarly, visitor numbers from Japan remained less than half their January 2005 month peak, despite an increase of 1,200 in January 2010. There were fewer visitors from China (down 4,800), partly due to the later timing of Chinese New Year in 2010, compared with 2009. There were 2.471 million visitor arrivals in the January 2010 year, 22,000 (1 percent) more than the 2.449 million in the January 2009 year and similar to the 2.472 million in the year ended January 2008. Visitors from Australia were up 117,700 (12 percent) for the year, but this was offset by large decreases in visitors from the United Kingdom, Japan, Korea, and China. New Zealand residents departed on 106,800 short-term overseas trips in January 2010, up 1,700 (2 percent) from January 2009. For the January 2010 year, short-term departures of New Zealand residents numbered 1.920 million, down 41,000 (2 percent) from the previous year. On a seasonally adjusted basis, permanent and long-term (PLT) arrivals exceeded departures by 2,000 in the January 2010 month, similar to levels experienced since February 2009. New Zealand's annual net migration balance was a gain of 22,600 in the January 2010 year, up from 4,500 in the previous January year, and the highest since the May 2004 year (24,000). The higher net gain in the January 2010 year was driven by 20,200 fewer PLT departures, with PLT arrivals decreasing 2,200 over the same period. There were 17,500 fewer PLT departures to Australia in the January 2010year, with decreases across all age groups.

Permanent departures were down 2.5% over the month, although this follows two consecutive months of solid increase. The trend in departures is now turning, led by an increase in departures to Australia. The Australian economy fared comparatively well during the global recession, managing to avoid recession. Job growth has increased beyond expectations consistently for a number of months. In contrast, the NZ labour market remains weak. The relative strength of the Australian economy and labour market will become increasingly attractive to New Zealanders, and we expect the rate of permanent departures to steadily pick up over the year. Implications: The monthly net migration inflow remains firm for now, but the turn around in departures signals a slow down in net migration over 2010. The slower rate of population growth will help ease pressures on housing supply. In addition, timed with the likely tax changes to property investment (reducing demand for housing), the slow down in net migration could further add to a weaker housing market over the second half of 2010. Slower population growth could also limit the ability of landlords to increase rent in response to tax changes. The softer outlook for the housing market is one factor reducing the need for an aggressive pace of tightening by RBNZ, with meaty chunks no longer necessary. We expect the RBNZ to commence OCR hikes in June, gradually unwinding stimulus with 25 basis point hikes at each meeting.