The volume of GSP increased in all states and territories, and after adjusting for population growth, positive GSP per capita was recorded in six states, with declines being seen in Victoria (VIC) and the Australian Capital Territory (ACT).
Real Gross State Income per capita, however, which captures the impact of Australia's declining terms of trade, recorded significant gains only in the two mining states noted above.
Glass Half Full or Half Empty?
With 21 years of data behind it to benchmark against, the RBA is able to apply a confidence interval to its forecasts as per the below graphic, which suggests that growth is unlikely to slow below 2 percent, although sceptics will note that such growth forecasts are forever right until they are not.
The central bank runs its models using history as a guide, and the Board believes that a recovery will proceed from household expenditure to business investment to labour market conditions, in that order.
History also suggests to the RBA that a pick-up in business investment outside the resources sector will come in time. Perhaps it already is.
Part 1 - INCOME GROWTH IS SLOWING
Of interest to analysts from Friday's release is the macro trend, and that is that the pace of growth in gross income per capita has slowed through FY2014.
The mining states also tend to feature prominently in terms of gross income per capita, but are slowing, while Tasmania (TAS) holds up the rear.
We note that these are crude calculations and they certainly do not mean that we should all be moving to Canberra in the blind expectation of a 50 percent payrise!
Nor does the data mean that investing in housing in Canberra is necessarily a smart move. Due to the apparent relative "affordability" of Canberra based upon reported post-tax incomes, the case for investing in Canberra has been put forward by analysts previously.
Our answer was "no" in 2013 and remains "no" today. Firstly, this is because there can be an inherent risk in investing in property where the labour force is so firmly wedded to such substantial public sector employment, which for us also puts serious question marks against Darwin and Adelaide.
And secondly, this is because dwelling prices have been elevated in Canberra for one reason only, and that is due to an artificial land scarcity through draconian - or at least, contrived - planning and zoning constraints.
As such, investing in Canberra housing is to some extent speculation on land release quotas and policy, which leaves investors too exposed to factors completely outside their control.
While Canberra is technically speaking Australia's capital city, for property investors it has many of the hallmarks of a regional city, including a lack of diversified industries, and substantial or unexpected land release is a risk which cannot be discounted as it might be in, say, Dover Heights or Darling Point.
What the Income figures Do Mean
TAS also saw an increase in gross income per capita. However we discount TAS as a destination for property investment for different reasons.
Seasoned property experts who have been around for more than a few cycles, such as Michael Yardney, will tell you that land-locked capital city real estate stacks up as an inflation hedge and as a worthwhile investment only when two key factors are aligned:
Part 2 - GSP REVEALS DIVERGENCE IN STATE ECONOMIES
On these chain volume measures, the mining states are definitely now sagging as mining and engineering construction drops off a cliff.
DFD in Australia was weak in FY2014 at just 1.2 percent, with 0.9 percentage points of DFD growth contributed by NSW and 0.3 percentage points by VIC (the NT population is too small to make a blip here).
In the vernacular of the Eurovision Song Contest's scoring mechanism, the other states in aggregate contributed 'nil points'.
In other words Sydney essentially contributed three quarters of DFD growth and Melbourne the other quarter, which is telling, and shows that the so-termed "wealth effect" of rising dwelling prices is alive and well.
Resi Construction Contributes
That's great to see and with a solid volume of building approvals in the pipeline we expect to see further economic growth contributed by residential construction in FY2015 as mining construction flails.