Festive travels
The November 2022 figures for arrivals and departures suggested a smaller net population inflow over the course of the month.
Source: ABS
The preliminary estimates show that we should expect there to be a large seasonal outflow from Australia in December as students and holidaymakers jet off overseas.
Indeed, this has already been evidenced by the seasonal increase in rental vacancies last month.
What an amazing chart, by the way, from the ABS:
Importantly for labour market dynamics, however, the number of temporary work visa holders has continued along its way with a strong recovery.
Australia's staff shortages in industries such as retail and hospitality were driven by the massive net loss of temporary work visa holders through the pandemic; but it's great to see that things are now on the mend.
Source: Westpac
Looking through the seasonal noise of travellers, transients, and temporary residents, monthly net permanent and long-term immigration into Australia has already returned to pre-pandemic levels, and will soon be breaking new highs.
Macquarie Macro Strategy chimes in below with one of their favourite monthly charts, which shows that net immigration will almost certainly top 300,000 this year:
Treasurer Chalmers actually conceded this week that net immigration in 2022-3 could well top 300,000, far ahead of the assumptions previously keyed into Budget papers.
This would take total annual population growth close to record highs of about 450,000 this year.
The latest bargaining trends data from the EBA showed annual wages increases remained stuck at around 3 per cent over the year, confirming that there's very little risk of a rapid acceleration in wages growth in Australia...especially now given the rapid acceleration in the size of the labour force.
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Inflation victory in sight
While financial markets certainly haven't got everything right over the past year or two (!), there are some increasingly promising signs emerging from the US.
This week, the 2-year breakeven inflation rate has fallen all the way back down close to the Federal Reserve's 2 per cent target.
Source: Bloomberg, Reuters
That's the lowest figure for 2-year breakevens since all the way back in 2020, and a far cry from the cyclical peak of almost 5 per cent less than a year ago.
While the Fed will be understandably cautious about setting off on a victory lap too soon, these are some really encouraging signs, and indeed futures markets are already looking ahead to interest rate cuts in the US later in 2023.
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Canada saw inflation of -0.6 per cent recorded in December, adding to the wider theme of inflation having peaked in late 2022.
