- A gauge of service sector jobs contracted for the first time since 2009 in September.
- It was latest sign that trade tensions have started to spill over into broader parts of the economy.
- The IHS Markit said its survey on service-sector employment index was indicative of non-farm payroll growth falling below 100,000.
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A gauge of service sector jobs contracted for the first time in nearly a decade in September, the latest sign that trade tensions have started to spill over into broader parts of the economy.
The research group IHS Markit said Monday its index for services employment fell to 49.1 from 50.4 a month earlier, marking the first contraction and lowest reading in the sector since December 2009. The overall PMI services index rose less than expected but still indicated expansion.
“The survey indicates that businesses continue to struggle against the headwinds of trade worries and elevated uncertainty about the outlook,” said Chris Williamson, the chief business economist at IHS Markit. “Firms have become more risk averse and increasingly eager to cut costs.”
The IHS Markit survey showed stabilisation in factory activity in September, which had dipped into a recession this year. Its related measure of manufacturing activity rose more than expected to a five-month high of 51.
Hiring has cooled in recent months as businesses grapple with a series of tit-for-tat tariff disputes between President Donald Trump and US trading partners. IHS predicted that at current levels, the survey employment index is indicative of non-farm payroll growth falling below 100,000.
“Key to the recent deterioration has been a further spill-over of the trade-led slowdown in manufacturing to the service sector,” said Williamson. “Inflows of new service sector business almost stalled in September to register the smallest rise since the survey began in 2009.”
Last week, the World Trade Organisation said that global trade in commercial services fell nearly five points from a year earlier and below its long-term average of 100. The WTO gauge includes service sectors such as air travel and finance.
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