Negative contributions to the GDP growth came from private demand (-0.2 percentage points), of which private consumption (-0.1 percentage points) and change in private inventories (-0.1 percentage points), while business investment was neutral. In addition, public demand substracted 0.1 percentage points off growth and net exports had a negative contribution of 0.1 percentage points.
Private demand declined by 0.2 percent in the September quarter, reversing a growth of 1.1 percent in the previous period, due to a drop in private consumption (-0.1 percent vs 0.7 percent in Q2) and compared to market expectations of a 0.2 percent decrease. In addition, capital expenditure fell unexpectedly by 0.2 percent, following a 3.1 percent growth in the second quarter and missing estimates of a 0.6 percent gain. It was the first decline in capital expenditure since the third quarter of 2016.
Also, public demand dropped 0.2 percent, after a 0.1 percent gain in the preceding quarter. The decline was mainly due to a faster fall in public investment (-1.9 percent vs -0.3 percent), which was the the steepest contraction in a year, while government spending growth was stable at 0.2 percent.
Exports of goods and services plummeted 1.8 percent, reversing a 0.3 percent rise in the second quarter and marking the steepest fall since the second quarter of 2015. Also, imports dropped 1.4 percent, following a growth of 1 percent in the June quarter and marking the biggest drop since the March quarter of 2016.
On an annualized basis, the economy shrank 1.2 percent, worse than market forecasts of a 1 percent contraction and following a 3 percent expansion in the June quarter. The fall in economic activity was driven by a decline in both private and public demand and a negative contribution from net external demand.