Downward migration trend halts

Stats NZ released its latest migration data today and it offers up a provisional estimate of annual net migration of 61,600 in the year ending February 2019.

That figure is near the highest reported under Stats NZ’s new outcomes-based measure, but it is subject to revision under the new measure and those revisions can be significant.

Stats NZ population insights senior manager Brooke Theyers says that means net migration data is most valuable when put in the context of a longer time series.

But the transition between the Stats NZ’s old and new ways of measuring migration is still making an accurate take on migration figures difficult.

Westpac senior economist Satish Ranchhod says that estimates of monthly net migration remain very high, with a net inflow of 6,570 in February.

But they continue to treat recent migration estimates with a large grain of salt, he says.

“While migration inflows appear to have firmed in recent months, we suspect that the extent of this increase is more modest than current estimates imply.

“At face value, the estimated level of net migration pushed higher again in February, rising to 6,570 (compared to 6,100 in January).

“That’s the highest level in 18 years and saw annual migration rising to 61,600 and it completely reversed the down trends that we saw through 2017 and 2018.”

Ranchhod says that if it is the case that migration and population growth are reaccelerating at a rapid pace that has important implications for the growth in New Zealand’s demand base, including in housing.

However, the change in Stats NZ’s estimate measures means the recent uptrend in migration needs to be interpreted with a great deal of caution.

“We’re concerned that it isn’t a true reflection of what’s happening to New Zealand’s population. Notably, the recent upswing in net migration seems inconsistent with visa data which has been fairly stable in recent months.”

So what to make of recent migration data, he says. “It looks like the early downtrend in net migration has slowed and may have been arrested.

“But we are much less certain that migration is now trending higher at a rapid pace. Looking at conditions in the New Zealand and global economy more generally, we suspect that net migration and population growth are currently running lower than estimates imply.”

ASB senior economist Mark Smith agrees there are issues with the new migration figures. Despite this, he says that a look at recent historical data suggests that net immigration inflows are continuing to trend up.

“We continue to expect that annual net immigration will eventually moderate, but the recent data suggests the strengthening trend is likely to continue for a while yet.”