The Institute for Supply Management’s nonmanufacturing index for September was the weakest in two years at 52.6. (An index of 50 indicates an economy that’s neither growing nor shrinking.)
The employment index among nonmanufacturers slipped from 53.1 to 50.4, the weakest since 2014. Again, any number above 50 represents growth.
The comments ISM received in the survey pointed up several themes: Businesses are worried about tariffs, rising labor costs, finding workers and the general direction of the economy.
Those issues have dragged down growth in the manufacturing sector and slowed global growth. The takeaway from Thursday’s data is that manufacturers aren’t alone anymore and that service providers, who represent 80% of U.S. employment, are starting to feel tariff impacts, as well.
Some firms worry that if prices rise for consumers, there will be less discretionary spending to go around. A new round of tariffs on consumer goods made in China came into effect in September, and additional tariffs are due in December.