IHS Markit data show U.S. economy stabilizing in September

American manufacturers are growing at the softest pace in several years amid a U.S.-China trade rift that’s contributed to a slowdown in the global economy.

The numbers: The economy appeared to stabilize in September after a bout of trade-related weakness toward the end of the summer, a new survey shows, but the U.S. isn’t growing as fast it was earlier in the year.

A survey of senior business executives showed slightly an uptick in growth in both the manufacturing and service sides of the economy, .

The economic-analysis firm said its flash manufacturing index rose to a five-month high of 51 in September from 50.3 in the prior month. Any number above 50 signals business expansion.

The IHS flash services index, meanwhile, edged up to 50.9 from 50.7.

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What happened: The overall IHS gauge of the U.S. economy fell to a three-and-a-half year low in August, when the Trump White House announced fresh tariffs on China in a move that roiled global financial markets.

Trade tensions have partly eased in September, but executives are still on edge. Both IHS indexes remain near multi-year lows and sit just above the cutoff line that separates expansion from contraction.

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Most notably, employment levels in the service segment of the economy declined for the first time in almost 10 years. More than four in five American workers are employed in service-oriented companies such as retail, banking, health care and education.

Big picture: The U.S. economy is still growing, but at a slower pace. The rest of the world isn’t faring any better, and in many cases, they’re in a funk.

European manufacturers contracted in September and posted the slowest growth in nearly seven years. Heavy industry in Germany was in recessionary territory.

Economists say the U.S. trade war with China has disrupted the global economy, but they also point out that the slowdown in Europe began even before trade tensions spiked.

What they are saying?: ““Jobs are now also being cut across the surveyed companies for the first time since January 2010, as firms have become more risk averse and increasingly eager to cut costs,” said Chris Williamson, chief business economist at IHS Markit. ““Key to the recent deterioration has been a further spill-over of the trade-led slowdown in manufacturing to the service sector.”

Market reaction: The Dow Jones Industrial Average and S&P 500 fell in Monday trades.

The 10-year Treasury yield dipped to 1.68%. The yield has sunk from a seven-year high of 3.23% last October.

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