22 Aug 2013

Economist expects net migration will stay high

7:03 am on 22 August 2013

Infometrics economist Matt Nolan is picking net migration will stay high after a stronger than expected month in July.

More people moved to New Zealand then left last month, and July also saw the smallest loss of people to Australia, a seasonally adjusted 1200, in more than 3½ years.

Mr Nolan said things are getting better in New Zealand so people are less inclined to leave.

If the Australian economy keeps struggling while the New Zealand one keeps improving, then departures will stay low.

On top of that, Mr Nolan said there are increasing arrivals as expatriates return home and the rebuilding of Christchurch attracts people looking for work.

Part of the reason house prices have been increasing is because there has been increased demand and if net migration remains elevated that will help to keep house prices high.

Mr Nolan said the Reserve Bank will be considering a range of positive data including strong retail sales, a fairly strong housing market, the fact that confidence indicators for businesses and consumers and households have improved a lot.

"The Reserve Bank will know that they're currently facing an economy that's accelerating, that's improving, as a result the Reserve Bank will be keen to indicate that they'll be tightening monetary policy soonish."

Mr Nolan said the Reserve Bank is still talking about raising rates in March, but it could move towards the end of this year.