Migration to Australia is at record highs: CommSec's Craig James

EXPERT OBSERVER

More people are deciding to call Australia home – if not permanently, at least for longer than a year. The lift in permanent and long-term arrivals reflects a perception of Australia as a great place to live and work – a country with a high standard of living and great opportunities.

Over 115,000 foreigners came to Australia as a “permanent or long-term arrival” in February. While February is seasonally a peak time for migrant inflows, the annual total of 844,800 is also a record high and up 11.4% on a year ago – the strongest growth in 20 months. 

In February there were also 40,740 Aussies deciding to move overseas either permanently or for more than year – the lowest level in four months. Over the year to February the net number (arrivals less departures) of permanent and long-term arrivals hit a five-year high of almost 300,000 people. While studying, working or travelling, the ‘new Aussies’ will contribute to spending and demand for accommodation. 

The new migrants boost employment in the short-term but provide the strongest contribution to economic output the longer that they are in their positions (as the case of all new employees). This highlights the fallacy of the recent ‘per capita’ discussion – more a reflection of a timing gap. 

Tourism

Tourist arrivals rose by 0.9% in February, the strongest gain in five months. Aussie tourist departures fell by 3.3%, the biggest fall in almost two years. 

Over the year, arrivals were up by 4% and departures were up by 3.7%. In February, tourists from Greater China (China and Hong Kong) totalled 141,800 (mainland China 115,600; Hong Kong 26,200), ahead of New Zealand (124,800). 

China is the largest source of tourists to Australia. Over the past year a record 1,451,600 tourists came to Australia from China, up by 3.9%. 

Tourists from New Zealand totalled 1,400,200 visitors over the past year, up by 3.0%. A record 364,300 Indian tourists travelled to Australia over the year to February, up by 16.7% on a year ago.

In February, there were record tourist inflows from New Zealand and India. And in the month a record number of Aussies travelled to India.

Migration 

In February there were 115,100 permanent and long-term arrivals in Australia. The annual number of permanent and long-term overseas arrivals rose to a record high of 844,800 in February, up by 7.3% over the year. 

In February there were 40,740 permanent and long-term departures from Australia. The annual number of permanent and long-term overseas departures fell from 546,310 to 545,610 in February but were still up by 5.2% over the year. 

Net permanent and long-term arrivals stood at a five-year high of 299,100 in the year to February, up 11.4% on the year.

Chinese inflation

Consumer prices rose by 2.3% in the year to March (forecast: +2.4%), after lifting by 1.5% in the year to February. It was the highest annual rate for consumer prices in five months 

Consumer prices fell by 0.4% in March after rising 1.0% in February. Food prices fell by 0.9% to stand 4.1% higher than a year ago. Non-food prices fell by 0.2% to stand 1.8% higher than a year ago. 

Producer prices rose by 0.4% in the year to March (forecast +0.4%), up from 0.1% in year to February.

What are the implications for interest rates and investors? 

Australia is rightly regarded as a great place for study, work and travel. The continued growth of short and longer term arrivals is good news for a raft of industries such as retailing, tourism and higher education. 

The lift in Chinese inflation is encouraging as a weak economy would be more likely to have deflation issues. Chinese consumer price inflation is near a 2% annual rate, like a raft of economies at present.

CommSec expects the cash rate to remain unchanged for the foreseeable future.

CRAIG JAMES is the Chief Economist of CommSec