The services sector, the largest segment of the US economy, continues to complain about difficulty finding workers to fill open positions (JUSTIN SULLIVAN)

Washington (AFP) – The dominant US services sector continued to grow in July, but at a slower pace as worsening trade tensions continued to drive prices higher, according to an industry survey Friday.

And the largest segment of the economy continued to complain about difficulty finding workers to fill open positions, with the US unemployment rate now down to 3.9 percent.

The Institute for Supply Management said its monthly survey showed its non-manufacturing index fell more than three points to 55.7 percent, due to a sharp decline in production and as orders, including for exports, dropped off.

The result, an 11-month low, was well below the average pace of the past 12 months, and fell far short of the consensus forecast — but still shows expansion.

Any score above 50 percent indicates growth, and the sector has been growing for 102 consecutive months.

“There has been a ‘cooling off’ in growth for the non-manufacturing sector. Tariffs and deliveries are an ongoing concern,” said Anthony Nieves, chair of ISM’s survey committee for the non-manufacturing sector. 

However, “The majority of respondents remain positive about business conditions and the economy,” Nieves said in a statement.

The latest data was released shortly after China threatened to impose retaliatory tariffs on another $60 billion in US goods, and possibly take other actions in response to President Donald Trump’s trade policies. 

Trump this week announced he would increase duties to 25 percent rather than the planned 10 percent on the next $200 billion in Chinese products to be targeted.

In the services sector, only two of the 18 industries surveyed reported a contraction last month, but the  prices index jumped another three points.

While the healthcare sector and other services remained upbeat, others continue to point to increasing trade concerns as a source of concern.

“Business is up overall but a lot of questions loom over the rest of the year. These include concerns about international markets and the increasing tariffs that impact the landed costs of goods,” a survey respondent in the retail trade said.

“Expanding concerns with price increases due to tariff and global trade policy changes and uncertainty,” another in professional services said.

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