New Zealand's net migration remained very strong in September

New Zealand's net immigration remained extremely strong in September, with the monthly net inflow comfortably above 5,000 and once again exceeding our forecast. On an annual basis, net migration has hit a new all-time record of 61,234. Meanwhile, short-term visitor arrivals were up strongly, implying that the recent strong run for the tourism sector has continued. 

The nature of the net immigration boom is slowly changing. The number of New Zealand citizens departing the country remains extremely low by historical standards, but has actually been creeping gradually higher for a year now (more New Zealanders departing actually detracts from net migration). Meanwhile, the number of overseas citizens entering New Zealand been rising steadily, with monthly overseas arrivals now 10% higher than three months ago. There has been a notable lift in people arriving on student and temporary worker visas.   

With offshore labour markets remaining weak, net migration is likely to remain very strong over the coming year. New Zealand's economy is slowing and Australia will eventually become a more attractive destination for migrants from an economic point of view. What's more, the inflow of foreign migrants is now running well above residence approval targets (90,000 - 100,000 over two years) and consequently many recent migrants on temporary visas will have to return home over the next couple of years. 

Net immigration has been an important force in the New Zealand economy in recent years. It has supported GDP growth and house prices while helping to suppress wages and inflation - thereby contributing to the high-growth / low-inflation / low interest rate situation that has prevailed.