For most people, paying attention to listed company profit reports is about as interesting as watching grass grow.

Key points: More than 40 per cent of listed companies reported falling profits in the second half of 2018

More than 40 per cent of listed companies reported falling profits in the second half of 2018 Sectors tied to the domestic economy, such as housing and retail, were the hardest hit

Sectors tied to the domestic economy, such as housing and retail, were the hardest hit A return to pre-housing boom activity could see 240,000 jobs lost in construction

But the reality is, those profits decide whether many Australians have jobs.

Viewed in that light, the current reporting season is more compelling than most.

There's a clear warning we should be alert, if not alarmed, about the state of the economy, and the risk that many jobs could be lost in coming months.

"The consumer outlook is somewhat challenging at the moment," Wesfarmers boss Rob Scott told the ABC, in somewhat of an understatement, after unveiling his company's result.

Sorry, this video has expired A lacklustre company reporting season suggests the economy is on the slide ( Andrew Robertson )

Blue chip profits falling

The roll call of big names with falling profits is a long one.

Coles, Qantas, AMP, Caltex, Commonwealth Bank, Transurban, Telstra, Domain, Scentre Group, Flight Centre, REA and Fortescue are just a few.

"It's pretty clear the Australian economy is moderating," Perpetual's Head of Investment Strategy Matt Sherwood said.

"The key question is, how much further does it have to go?"

According to AMP Capital, the number of companies reporting a fall in earnings has jumped by more than three-quarters to 41 per cent.

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And although some high-profile names like Qantas and Rio Tinto are showering their investors in cash, dividends are also on the way down.

"Those parts of the share market most exposed to the Australian economy, particularly housing and retailing, that's where the weakness is," AMP Capital chief economist Shane Oliver said.

So, while the big miners are being propped up by high global commodity prices, Dr Oliver makes the obvious point that many others have had six months to forget.

"I think the ones that stood out of course were the two big retailers, Coles and Woolworths, reporting quite weak profit results," he said.

"Surprisingly weak, and of course that's the consumer staples part of the share market."

This plays to the theme that falling house prices and low wages growth are persuading Australians to spend less.

"Consumer spending is around 60 per cent of Australia's GDP, so it's very important when we're looking at the future outlook for economic growth in Australia," Saxo Capital Markets analyst Eleanor Creagh noted.

Construction jobs under threat

Another fall in construction activity in the December quarter has already been reflected in the results of companies like Stockland, A.V. Jennings and Boral.

It's a situation that threatens one of the last pillars holding up the economy: employment, which at the moment remains strong.

"With around 1.1 million Australians employed in the construction industry, and others whose employment relates to residential construction, we can see that potentially there's going to be a drop-off in hiring and potentially an increase in unemployment to come," Ms Creagh said.

And that doesn't auger well for the unemployment rate.

Around a quarter of the people employed in the construction industry received their jobs after the start of the building boom in 2012.

If employment in the sector returned to pre-boom levels, around 240,000 jobs could be lost, sending the unemployment rate soaring to more than 7 per cent.

Construction workers would be among the first to feel the pain if the domestic slowdown picks up pace. ( ABC News: Graeme Powell, file photo )

With so many dark economic clouds brewing, Perpetual's Matt Sherwood says it's time for the Government and the Reserve Bank to get on the front foot before it's too late.

"I don't accept the view that we have an inevitable fate no matter what we do, but I do believe we have an inevitable fate if we do nothing," he said.

"So, we need to get rates lower, we need more stimulus from the Government, and certainly a lower exchange rate would also help."

In Mr Sherwood's mind, the Coalition should be looking hard at how the Rudd government kept the economy afloat through the global financial crisis, where cash handouts to households (then spent by consumers) were crucial.

ASX rises despite the fears

And then there's the stock market.

Profit season may be pointing to an economic slowdown, but no-one has told the market.

It reflects investors' views on future company profits, and in the current climate you'd expect it to be falling, but in the last month, it's risen around 5 per cent.

"The Australian share market fell 14 per cent from its high in August last year to its low in December; global markets had even bigger falls," AMP Capital's Mr Oliver said.

"Share markets in Australia and round the world got too carried away on the negative side and now there's been a correction on the upside."

That may change next week when we find out whether the economy grew, or shrank, in the December quarter last year.