The week that was
The good news from the European economy keeps flowing, this time with the unemployment rate dropping to 9.1 per cent, the lowest reading since February 2009. The European Central Bank seems to be getting it ‘right’ with negative interest rates and quantitative easing underpinning overall economic growth and job creation. In 2013, with Europe mired in a deep recession, the unemployment rate rose above 12 per cent.
In terms of individual countries within Europe, the Eurostat data show the lowest unemployment rates are in the Czech Republic (2.9 per cent), Germany (3.8 per cent), Malta (4.1 per cent) and Hungary (4.3 per cent). The highest unemployment rates are in Greece (21.7 per cent), Spain 17.1 per cent, Italy (11.1 per cent) and Cyprus 10.8 per cent).
The week ahead
The extent of the cooling in the housing market will get a further update with the release of the housing finance data for June. Since the peak in the number of new loans in June 2016, housing finance has dipped 4.4 per cent with falls in new lending in three of the past four months. The value of loans has also started to trend lower.
With the banks hiking interest rates for investors and owner-occupiers outside moves in official rates, plus a tightening in credit from APRA and other regulator changes, a softening in new lending seems assured. This downturn in housing is mixed news for the RBA – it is desirable from the point of view of a move to greater financial stability, but at the same time, it undermines the economic growth outlook as the overall housing market looks to track lower.