Yesterday, Statistics New Zealand released its permanent & long-term migration figures, which revealed that New Zealand net migration is booming and Kiwis are returning home from Australia:
In the June 2014 year, permanent and long-term (PLT) migrant arrivals numbered 100,800 (up 14 percent from 2013), the first time more than 100,000 arrivals have been recorded in a year. Migrant departures numbered 62,400 (down 22 percent). This resulted in a net gain of 38,300 migrants, the highest annual gain since the October 2003 year (39,300)… In June 2014, New Zealand had a seasonally adjusted net gain (more arrivals than departures) of 4,300 migrants, the second-highest monthly gain of migrants.
In the latest year, New Zealand had a net loss of 8,300 migrants to Australia, well down from 31,200 a year earlier… Seasonally adjusted PLT arrivals of 2,000 migrants from Australia in June 2014 matched the number of departures to that country, resulting in net migration of zero. The last time this series recorded net migration of zero was in August 1991.
A quick examination of the net migration data between New Zealand and Australia shows that the loss of Kiwis across the pond has slowed to the slowest pace in around 19 years, which was when the Australian economy was still recovering from the after effects of the early-1990s recession (see next chart).
Logically, New Zealanders should be particularly sensitive to employment prospects in Australia, and swings in migration levels between the two nations should be indicative of the underlying strength of the Australian labour market.
When job prospects are strong in Australia, we should logically expect migration to Australia from New Zealand to increase substantially. By contrast, when Australian employment conditions weaken, we should logically expect New Zealand migration to slow.
Indeed, plotting annual Kiwi net migration against the trend Australian unemployment rate does show a strong correlation (see next chart).
And the sharp slowing of Kiwi net migration does suggest that Australian unemployment is facing further deterioration.
Maybe Kiwi battlers have a better grip than your typical Aussie economist on the Australian labour market and unemployment?
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also Chief Economist and co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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