WATERCOOLER: How's the economy? Is it better or worse now?

RIGHT now, the Australian economy is harder to read and even harder to manage than any time I can remember.

RIGHT now, the Australian economy is harder to read and even harder to manage than any time I can remember. 

Overall economic growth has slowed to just 2%, despite the Reserve Bank reducing interest rates to the lowest level in living memory. If the economy feels sluggish, it's hard to pin the blame on the Reserve Bank.

In addition, your perception of how the economy is currently performing depends on where you sit.  Sections of manufacturing continue to struggle, which has tended to impact on South Australia and parts of Victoria in particular.  

If you're in a region that previously benefited from the extraordinary mining investment boom, conditions aren't great.  It takes far fewer people to run a mine or a gas plant than it does to build one. 

The end of the construction boom in the mining industry has, not surprisingly, hit states like Queensland and Western Australia the hardest.  Even though we are now seeing the fruits of that construction boom show up in higher export volumes, the jobs growth isn't there anymore. Mining is a far more capital intensive business than many people appreciate. 

Not only is the mining industry shedding jobs, but the prices we are receiving for our major mining exports - iron ore and coal - have fallen sharply.    

But is all this too 'glass half empty?'  Outside of mining and manufacturing, growth is much better; jobs are being generated.

Over the past three years, mining and manufacturing have shed just over 100,000 jobs.  However, the overall level of employment has risen by 460,000 over the same period. 

Health care (up 118,000) construction (up 92,000) and accommodation and food services (up 58,000) have more than offset losses in mining and manufacturing. 

There are signs that lower interest rates and a lower Australian dollar are boosting the economy.

This is not to say that Australia doesn't have its challenges. The Reserve Bank may still be forced to reduce interest rates further, even though there are few, if any, signs that the current level of interest rates is holding anyone back.

What do you think about this? Do you personally feel the economy is better or worse than five years ago?

Brian Parker is chief economist with Sunsuper

Originally published as WATERCOOLER: How's the economy? Is it better or worse now?