Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Friday, 8 April 2016

Immigration alley-oop

Population growth to rebound in 2016

In case it wasn't already obvious from reading this blog, I absolutely love analysing data flows, and I particularly love it when the numbers "just work"! 

Immigration and population growth has been a great case in point. 

There was a huge surge in immigration and population growth to more than 450,000 per annum through the mining boom, which naturally slowed as peak construction activity passed and unemployment rates began to rise.

I've been hinting on this blog for a while that population growth probably bottomed out in 2015 and by now is in all likelihood rising again, though I haven't had any hard data to back that up just yet.

This is partly because a better performing Australian economy is now attracting more migrants - annual employment growth of about +2.3 per cent has been far outpacing population growth of about +1.3 per cent, helping the unemployment rate to cascade into a 28 month downtrend.

And secondly because, largely unrecognised by commentary, a relaxation of visa rules will over time see tens of thousands of international students acquire permanent residency through the "back door" of higher education. 

Immigration rises again

There was a significant +14 per cent year-on-year jump in the number of permanent and long term arrivals in February to 91,590, while the number of permanent and long term departues wasn't much changed at 31,700, for a net monthly inflow of just under +60,000.

I wouldn't read too much into one month of figures, granted, but mapping the data on a rolling annual basis showed a rise in net immigration for the first time in two years. 

The share of settlers from Asia over the year to February continued to increase to its highest ever level at 58.1 per cent, largely at the expense of arrivals from the United Kingdom and New Zealand. 

Record short term arrivals help rebalancing

The lower dollar is very slowly but surely helping the rebalancing of the economy, with a record 7.55 million short term arrivals in the year to February.

Australia is a hugely wealthy nation when measured in per capita terms, yet provided the dollar stays low enough for long enough evenutally there could even come a time when short term arrivals match the number of our own overseas trips, as more Aussies opt to holiday at home, thereby boosting the economy. In the words of British Rail, "we're getting there".

The annual number of short term arrivals from China, Hong Kong & Taiwan (1.44 million) is poised to eclipse those from New Zealand & Oceania (1.49 million) imminently.

Education arrivals going vert!

With the share of overseas born Aussies now at a 120 year high, more than 2 million persons per annum are venturing Down Under to visit friends and relatives, which in turn reinforces the strength in the number of visitors from Asia. 

The most significant demographic shift of all has been the near-exponential surge in education arrivals, which bolted to another new record high of 95,100 in February, taking the annual total past half a million for the first time on record. 

This is extremely significant, as in the years ahead tens of thousands of these international students will become permanent residents, largely in the largest capital cities.

The wrap

Well, it has certainly been a while coming, but February saw the first rebound in immigration in a couple of years.

In truth, population growth never really slowed that much in the largest capital cities anyway - still chugging along at a thunderous 80,000 to 90,000 per annum - the slowdown was more of a resources and a regional thing. 

In any case from observing the ABS data and from mapping out official government forecasts it looks as though population growth probably bottomed out at around 310,000 per annum, and is set to increase to about 340,000 in 2016, and to beyond 400,000 per annum well before the end of the decade (forecast derived from official data, not Zero Hedge apocalypse type blogs).

Perhaps just as relevantly, it is important to note that the population growth is becoming increasingly centralised and focussed on a handful of capital cities, a trend which will only accelerate thanks to Asian and international student migration. 

Don't take my word for that, though - see what the population and demographic experts ID have to say about it