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US business activity picks up in September, but new service work nearly stalls

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US business activity picks up in September, but new service work nearly stalls

Private-sector output in the U.S. registered a "slightly faster" improvement in September than the three-and-a-half year low in the prior month, amid "modest" increases in service sector activity and manufacturing output, according to IHS Markit.

The seasonally adjusted Flash U.S. Composite PMI Output Index, a weighted average of manufacturing and services business activity, came in at 51.0, compared with 50.7 recorded in August. An index reading above 50 indicates an overall increase.

The U.S. Manufacturing PMI rose to 51.0 in September from August's 50.3, marking its highest reading since April. The Flash Manufacturing Output Index climbed to a 5-month high of 51.7 from 50.8.

Increased rates of production and new order growth boosted the headline PMI, along with a "slight" increase in staffing levels. Export order books continued to deteriorate, with new work from abroad falling for the fourth time in five months.

The Flash U.S. Services PMI Business Activity Index edged up to 50.9 from 50.7, marking one of the lowest readings recorded in the last three and a half years. New work nearly stalled, with the growth rate being the slowest since October 2009. Weakened demand led to a greater fall in volumes unfinished work.

Jobs were cut across the private sector for the first time since January 2010, with companies becoming more eager to reduce costs.

Despite the pickup in overall growth, it was among the slowest since 2016 amid trade concerns, said IHS Markit Chief Business Economist Chris Williamson. He noted a continued "spill-over" of the trade-led slowdown in manufacturing to the service sector.