By Wayne Cole
SYDNEY (Reuters) – Australia’s population is expanding at the fastest pace in the developed world as skilled migrants flock to the resource-rich nation, a fillip to economic growth overall but perhaps also a source of puzzling weakness in wages.
Government figures released on Thursday showed the number of people resident in Australia increased 388,100 in the year to June, a rise of 1.6 percent on 2015/16. That was far above the global increase of 1.1 percent, and well ahead of the United States’ gain of 0.7 percent and Canada’s 0.9 percent.
There’s still plenty of room for more, given the giant continent still only has 24.6 million people, putting it at 53rd in United Nations global population rankings.
Much of Australia’s growth came in net overseas migration, which surged more than 27 percent in the year to June to 245,500. That was the highest 12-month total since 2009, while the flow into the states of New South Wales and Victoria beat records.
“A strong labor market is attracting interstate and overseas migrants to Melbourne, while better housing affordability and jobs growth is driving population growth in Queensland and Tasmania,” said Ryan Felsman, a senior economist at CommSec.
“Overall the stronger rate of population growth is boosting spending, demand for infrastructure, demand for homes, and overall economic growth.”
Leading migrant countries include China, India, Britain and New Zealand.
SURGING PROPERTY PRICES
The flood of newcomers, mostly on skilled migrant programs, is one reason property prices have been on a tear in recent years, especially in Sydney and Melbourne.
The extra demand created by all these new Australians was also a major reason the economy grew a brisk 2.8 percent in the year to September. Indeed, strip away population growth and the economy would have expanded by just 1.3 percent.
Yet the influx of able bodies has also expanded the workforce right at the time when employers were ramping up their demand for labor, restraining wages growth.
Separate figures from the Australian Bureau of Statistics released on Thursday showed a barnstorming 383,000 net new jobs were created in the year to November.
But wages still grew at a pedestrian annual pace of 2 percent, a perfect case of expanding supply benefiting employers rather than those already employed.
Policymakers at Australia’s central bank have been baffled by the divergence between employment and wages, citing the mystery as an argument against a rise in interest rates anytime soon.
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