Australia's economy shrank for the first time in over five years last quarter as businesses, consumers and government all cut back on spending, an unexpected blow that will challenge policymakers' optimism for growth.
The local dollar sank about half a cent after the Australian Bureau of Statistics reported gross domestic product (GDP) fell 0.5 percent in the third quarter, from the second when it rose a revised 0.6 percent.
That was the first contraction since early 2011 and only the fourth since the country's last recession in 1991.
The value of all goods and services was 1.8 percent higher than the same quarter last year, pulling back sharply from around 3.1 percent in the second quarter.
Business investment was the biggest drag with miners still unwinding a decade-long spending boom, while home building retreated after a very strong run.