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US private sector job gains slow more than expected

Employment growth in the U.S. private sector slowed more than expected in September, a day after disappointing manufacturing data reignited concerns about the economy.

Private-sector employers added 135,000 jobs in September, compared to the Econoday consensus estimate of 152,000 job gains, the ADP National Employment Report showed.

Gains in August were revised down to 157,000 jobs from 195,000 jobs.

The closely watched ISM manufacturing purchasing managers' index hit a 10-year low yesterday as the sector fell further into contraction in September. Markets are now pricing in a nearly 64% probability that the U.S. Federal Reserve will cut rates again toward the end of the month, compared with a 53% probability a week ago.

Large businesses added 67,000 jobs, medium-sized firms hired 39,000 people and small enterprises added 30,000 jobs, according to the report produced by the ADP Research Institute in collaboration with Moody's Analytics.

Small businesses, in particular, have become more cautious in hiring staff, said Mark Zandi, chief economist of Moody's Analytics. "If businesses pull back any further, unemployment will begin to rise."

Employment figures in the service-producing industry increased by 127,000 in September, led by job gains of 42,000 in the education/health services segment.

The goods-producing sector added 8,000 jobs. Within the industry, the construction sector led the rise, with 9,000 additional jobs.

"The job market has shown signs of a slowdown," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, adding that the average monthly job growth for the past three months was 145,000, compared with 214,000 a year ago.

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