The Reserve Bank's latest statement on monetary policy released last Friday is a 68-page document that lets you know that if you thought the economy was just barely chugging along you were right. It is a document filled with little optimism and lots of uncertainty - of which most concerns downside risks.
If the RBA were to give their statement a title as the IMF does with its economic outlook, it would likely be along the lines of "Transition from the mining boom ... still waiting".
The longed-for transition, in which the Australian economy shifts from one driven by massive investment in the mining industry to one where the non-mining sector takes over, is still very much in the draft stage. Given the peak of mining investment occurred in 2012, the RBA could be forgiven for looking at their watches and suggesting the transition is being a little bit more than just fashionably late.
The estimate in the latest statement did not contain any significant changes from those in the August one. The RBA continues to expect 2015 to be worse than this year and that the economy won't grow at above-average levels until after 2016.
The statement came out the day after the Australian Bureau of Statistics released its latest unemployment figures which provided a mass of revisions to the previous six months. After a period when it was clear the numbers the ABS was producing were jumping around too radically to be realistic, they rejigged the numbers and found that alas, the employment situation was worse than it had previously suggested:
Rather than an unemployment rate of 6.0% in September, it now turns out it was 6.1% and in October it rose again to 6.2%. The seasonally adjusted rate was actually 6.245%, meaning it was ever so close to being rounded up to 6.3%.
Bad as this news was, it only really confirmed what we all knew. The employment situation is not strong. There are very tentative signs of improvement from measures such as the Department of Employment's leading indicator of employment, which has risen slightly in the past three months. But overall, as the RBA puts it, "conditions remain subdued and there is still a degree of spare capacity".
Spare capacity is a nice anodyne economist way of saying a lot of people are either unemployed or wanting to work a lot more hours than they now are. And just in case you were hoping the RBA has turned all giddy because job ads have slightly risen in the past couple of months, it suggests that "a sustained decline in the unemployment rate is not expected for some time".
One of the problems for the economy is not just the transition from the mining boom, but that it is occurring at the same time the baby boomer generation is transitioning to retirement. It means we have a smaller percentage of the population working now than in the past.
The employment-to-population ratio is down to 60.6% - the lowest it has been since December 2004:
And the ageing population has a lot to do with it. Before December 2010, the percentage of 15- to 64-year-old employed moved roughly in line with the total adult population figure. Since then the total figure has dropped much more quickly:
Partly this is because (as I have written before) more 15- to 19-year-olds are staying in school than in the past, but also because from 2011 onwards those born in 1946 turned 65.
So where to from here?
Well, the RBA noted that at least productivity growth was "expected to remain a little above its average pace of the past decade", and that combined with the lower exchange rate "labour costs will remain well contained".
We'll now pause to listen to the cheers from business leaders and the government as they applaud the current industrial relation system.
OK, maybe not.
What about exports? The RBA expects export growth "to continue to make a sizeable contribution to GDP growth". From 2016 onwards it expects a big growth in liquefied natural gas exports particularly.
But the end of the mining investment boom continues to drag on growth. The RBA predicts the "sharp declines" in mining investment to take about 1.25 percentage points off of GDP growth in 2015.
One problem for the export side of the boom is the falling prices of commodities - notably the "bulk commodities" such as iron ore and coal. The RBA's latest commodity prices index was also released last week and it showed that bulk commodity prices have fallen 35% in the past 18 months and 15% in just the past six months:
There is some bright news from the falls in the exchange rate. After spending six months seemingly stuck between US$0.92 and US$0.94 since the end of August the value of our dollar has plunged:
The win by the Republican party in last week's congressional election led to the dollar falling again as investors bought the US dollar on the (rather tenuous) assumption that a Republican majority would lead to a stronger economy.
A lower dollar certainly is in our benefit. The RBA suggested that a 10% fall in value "would be expected to increase output by frac12;-1% over a period of two years or so".
The rather big caveat to that is that the fall in the dollar is not accompanied by a similar or bigger fall in commodity prices.
But throughout the RBA statement, any possible positive gets stomped by a likely negative. It notes that even with the fall in the exchange rate being accompanied by a fall in export prices, the two combined should still see "a small boost to GDP in the near term". Mostly this is due to a drop in oil prices. But it then quickly notes that any positive from this has been matched by "a downward revision to growth in business investment" owing to less-than-expected investment in non-residential construction.
How about the services sectors? We're always told Australia is a services economy now.
Alas, we get no joy here either. Last week as well, the Australian Industry Group's latest performances services index was released showing a 1.8 point fall to 43.6 points in October. This was the lowest since August 2013. And as a result of less than 50 suggests the sector is contracting, this meant the sector had been contracting for eight consecutive months.
The RBA notes rather unhelpfully that "there is considerable uncertainty about the timing and the speed of the recovery in non-mining investment".
It suggests business might be waiting for a pick-up in demand before investing, but on the other hand it also suggests (or perhaps more accurately, hopes) business might be willing to take some risks and increase investment sooner than expected.
Uncertainty and positives countered by negatives: such is life within the transitional economy.