Jobs and housing finance keep RBA on edge

Yet more good economic news from an economy that is going from strength to strength this year. But for borrowers the good news turns bad when it comes to interest rates. The seemingly unending growth in employment only adds to the picture of an economy heating up, further justifying this month's rate rise and underlining the threat that the Reserve Bank (RBA) might decide more might be necessary. Another 50,000 full-time jobs in July after forecasts of only 5,000, and unemployment down to 4.8 per cent. Housing finance is also showing a similar trajectory with both the value and number of loan commitments rising again in June. The value of all dwelling commitments was up 2 per cent for the month led by investment loans, up 4.5 per cent in total value, on the back of the recovery in apartment sector. The number of loans for owner-occupied housing rose 1.3 per cent. The latest wages growth figures out next week will be important for the inflation outlook and future rate rises. Wages have been growing over the last year but in a fairly contained way so far. But how long can this continue with the booming jobs market making unemployed skilled workers as rare as hen's teeth? At just over 4 per cent they are not far off a level that would have the RBA ready to act on rates again. But further rate rises are not certain - there are now two rate rises working their way through the system and we will need some months to work out the balance of their impact against the strong economy.