The expansion of the labour pool in New Zealand has slowed for the second consecutive quarter, indicating a potential decline in the influx of foreign workers.
According to Statistics New Zealand, the working-age population (individuals aged 15 and over) increased by 24,500 in the fourth quarter, reaching an estimated total of 4,256,500. This growth is a decrease from the 31,100 gain in the third quarter and 35,400 in the second quarter.
A report from Bloomberg noted that the slower rise in the working-age population suggests that the surge in immigration, which significantly impacted the labour market in previous quarters, may be tapering off.
This development, however, could be a positive sign for the Reserve Bank, which had expressed concerns last year that increased housing demand from new arrivals could fuel inflation and potentially necessitate another hike in interest rates.
An unexpected contraction in the country’s gross domestic product in the third quarter has led investors to anticipate aggressive rate cuts this year. Despite a record net immigration of 128,900 in the 12 months leading up to October, monthly immigration gains have diminished, with approximately 9,300 in the latest month, the lowest since December 2022.
The annual increase in the working-age population, which rose by 124,000 through December, marks the largest yearly growth since record-keeping began in 1986, as per the latest data.
The reopening of borders post-pandemic and the subsequent arrival of foreign workers have played a crucial role in addressing labour market shortages in New Zealand. This influx is believed to have alleviated wage inflation pressures, which reached record highs in early 2023. Businesses report finding it increasingly easier to hire both skilled and unskilled workers, indicating a potential easing of the labour market and a possible rise in unemployment.
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