I don't know about the rest of the world, but in the States asking someone what they do is a way of opening conversation. As someone else said, it's an icebreaker. I don't think people ask to be nosy or offensive. They are just trying to start a conversation. I can see that answering the question might be awkward though if you don't work. I like the idea of giving a non-comittal kind of answer then getting the person to talk about themself.
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