Australian Economy

Recession smashed Kiwis flee to Australia

Earlier this month, consultancy Infometrics warned that New Zealand faces a “brain drain” as prime 25-44 aged residents move to Australia in search of work and better paying jobs.

Infometrics noted that Australia’s unemployment rate was lower than New Zealand’s in the first quarter of this year.

This was a departure from the average rate between 2014 and 2018 when Australian unemployment was 0.7 percentage points higher than New Zealand’s:

Trans-Tasman unemployment rates

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“The latest figures for the March 2024 quarter show that Australia’s unemployment rate is now 0.4 percentage points below New Zealand’s rate – the worst relative result, from New Zealand’s perspective, since 2012”, Infometrics director Gareth Kiernan said.

“It’s little wonder that more people are looking for better opportunities across the Tasman”.

“If we take these figures alongside the age breakdown of migrants entering or leaving the country, it seems likely that much of the country is experiencing a relative drain of its workforce of 25- to 44-year-olds”, he said.

On Wednesday. Statistics New Zealand released migration data for New Zealand, which confirmed Infometrics’ concern.

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The charts below from Justin Fabo at Antipodean Macro summarise the situation.

Departures have rocketed, which has crashed monthly net migration:

This surge in departures has been driven by New Zealand citizens:

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Net migration by citizenship

According to Statistics New Zealand, “there was a provisional net migration loss of 27,000 people to Australia in the year ended December 2023”.

“This was made up of 17,500 migrant arrivals from Australia to New Zealand, and 44,500 migrant departures from New Zealand to Australia”.

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Who can blame them? While Australia’s economy is bad, New Zealand’s is far worse.

New Zealand is suffering a deeper per capita recession, with per capita GDP down 4.3% from the late 2022 peak, following six straight quarterly declines:

NZ per capita GDP growth

Forward-looking labour market indicators in New Zealand are also sicker than Australia’s, with job ads collapsing and applications per job ad at soaring:

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NZ Seek data

With the Reserve Bank of New Zealand keeping the official cash rate on hold at 5.50% on Wednesday, the economy and Kiwis will continue to struggle.

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