The current rate of immigration is running at an annual rate equivalent to 100,000, says a senior economist. Photo: RNZ / Marika Khabazi
The labour market is showing few signs of cooling as surging immigration has led to a lift in employment.
Monthly figures show total filled jobs increased 0.6 percent last month on March, to be up 3.8 percent on a year ago, the fastest rate of growth in more than a year.
Westpac senior economist Michael Gordon said firms may be playing catch up and were clearly still in hiring mode, which would underpin economic activity.
"The most timely data on the labour market is not flashing any recessionary signals yet - if anything just the opposite."
The relaxing of visa rules had helped to boost the workforce and alleviate labour shortages, Gordon said, but the current rate of immigration was running at an annual rate equivalent to 100,000.
The Reserve Bank (RBNZ) for now would have to watch how the numbers pan out, he said but it would not be happy if it were to persist and hold up economic activity at a time when it is forecasting a slowing economy, even a short, shallow recession and a rise in unemployment.
Last week's monetary policy statement, in which the RBNZ signalled an end to more interest rate rises, forecast the current 3.4 percent unemployment rate to rise to 4.6 percent by the end of this year, peaking at 5.4 percent through much of 2025.
"There's really not a lot of wiggle room for them to wait around. I think there are risks that they will have to do more in this cycle, how much is very much up in the air around how long this migration boom persists and how it manifests in inflation pressures," Gordon said.
Last week the RBNZ said it was still uncertain about the overall impact of immigration, between reducing labour market pressures and wages on one hand and stoking demand for goods and services, which could inflationary, on the other.
The strongest annual growth in jobs was in hospitality, followed by logistics industries, with the highest growth in Auckland and Canterbury.
