Immigration surge good news for economy

A rebound in net immigration is expected to moderate the economy's downturn and stiffen the Reserve Bank's resolve to keep its foot off the accelerator for some time yet, economists say.

Statistics New Zealand said yesterday the country gained a net 1830 migrants in March, seasonally adjusted. That is nearly three times the average monthly gain over the previous 12 months and the largest net inflow since February 2004.

For the year ended March, the net gain was 9700, in line with the long-term average.

"Other than the bounce we had this month, the arrivals numbers have been pretty stable and that's consistent with visa issuance data from the Immigration Service," Goldman Sachs JB Were economist Shamubeel Eaqub said.

"It's more a case of people not leaving in the same numbers they were. That's an encouraging turnaround but it will be very much in the Reserve Bank's mind."

Despite a slowing economy, the unemployment rate at 3.6 per cent is low by international and historical standards.

About 30 per cent of "immigrant" arrivals are New Zealanders returning after spending more than a year overseas.

But in the year to March, two Kiwis left the country - intending to be away for at least a year - for every one who returned.

The net outflow of 24,100 New Zealanders was up 3500 on the previous year, explained by an increased net loss of people to Australia, whose economy has been recovering.

That rate of net immigration increased the population by about 0.4 per cent, which when combined with natural increase (births minus deaths) would push the population growth rate to a relatively strong 1.1 per cent.

"It will add to the Reserve Bank's nervousness," ASB Bank chief economist Anthony Byett said. "It raises the risk that the housing market doesn't slow."