GDP growth was much stronger than expected in Q3.

According to the BEA’s advanced estimate, GDP grew at a 3.5% pace. While this was down from 4.6% in Q2, it was well ahead of the 3.0% expected by economists.

The there were a few surprises including government spending, which jumped by 4.6%. This was responsible for 0.83 percentage points of GDP growth.

“After being such a massive drag on the economy in recent years, the public sector is now a big positive,” Capital Economics Paul Ashworth said.

Despite some slowdown in the housing market, residential investment also had a nice showing.

“The big upside surprise in the data is the residential investment component, where the 1.8% increase is impossible to square with the monthly construction data – we expected a 10% drop – and a downward revision in due course is a decent bet,” Pantheon Macroeconomics Ian Shepherdson noted.

Personal consumption climbed at a 1.8% rate, which compares to expectations for 1.4%.

The closely-watched real final sales metric (GDP less the change in private inventories) jumped 4.2%, up from 3.2% in Q2.

Here’s a breakdown of contributions to GDP growth via @cigolo and Reuters’ Vincent Flasseur.

Here’s a breakdown of the components of growth.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.