US services sector activity hit in September amid sharp slowdown

US services sector activity stalled in September amid a sharp slowdown in new orders, while subdued employment added to mounting evidence of sluggish labour market conditions because of sagging demand and supply of workers.

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The survey from the Institute for Supply Management (ISM) also showed a measure of prices paid by services businesses for inputs hovering near three-year highs last month. Signs of stagnating activity and elevated services inflation could complicate matters for the Federal Reserve, with financial markets expecting another interest rate cut this month.

The survey assumed more importance than usual after a lapse in funding forced a shutdown of the US government early this week and delayed the release of the closely watched monthly employment report for September. It was the first time since the 2013 government shutdown that the employment report, crucial for decision-making by officials at the US central bank, businesses and households, was not published.

President Donald Trump's aggressive, sweeping tariffs on imports have eroded business sentiment, constraining activity across the services and manufacturing sectors.