NZ: Falling net-permanent migration
Falling net-permanent migration points to reduced domestic demand in 2008
The net number of permanent migrants dropped to just 20 (seriously) in December, as the number of departures continued to rise. The tiny increase in net-permanent migration is the smallest since May 2001 (when departures exceeded arrivals by 250 emigrants). Over the 2007 year, immigration growth moderated to the slowest pace in over six years. The drop in immigration points to weaker demand for housing (chart) and a drop in consumption growth. Departures bounced to 13.1%oya in 2007, while arrivals fell 0.2%oya.
Net-permanent immigration placed a solid floor under housing activity and consumption growth in 2006 and early 2007 (charts). The recent downward shift in immigration has effectively lowered that floor into 2008, and the downside risk to housing market activity and consumption growth has risen as a result. That said, given the slowdown globally, fewer Kiwi's are likely to depart New Zealand in 2008, and a larger amount of expatriates may return home - bolstering the net migration numbers somewhat.
The number of short-term visitor arrivals fell 1.2%m/m in December. The fall in tourists to New Zealand represents the third monthly decline in four months, and points to a reduction in service exports over the quarter.