New figures show that the giant US service sector grew at a snail's pace in July as the country's economy appeared to be stalling.
The report from the Institute for Supply Management overshadowed earlier figures on jobs which were slightly better than expected. World stock markets fell sharply after the release of the figures.
The ISM index of non-manufacturing activity dropped to 52.7 last month, just barely above the 50 no-growth level, continuing a slowing trend that began after the index hit its post-recession peak of 59.7 in February.
While the entertainment/recreation and banking/finance sectors reported more growth, the health, utilities and construction sectors shrank, ISM said. The institute said companies' comments remained mixed. 'For the most part they indicate that business conditions are flattening out,' ISM said.
Earlier, a survey showed that US private sector hiring slowed in July, as the economy slowed and uncertainty rose from the political battle over raising the country's debt ceiling.
Recruitment firm ADP said a net 114,000 jobs were created by private businesses, compared with 145,000 in June. This was still better than the May figure of 35,000, and close to the monthly average for the past six months of just under 113,000.
The new jobs created were all in the service sector, especially health services and professional business services. About 7,000 jobs in the goods-producing sector were lost last month, ADP said.
With US governments at all levels cutting budgets and laying off staff across the country, many hope private sector hiring will pick up to make a dent in the 9.2% unemployment rate.
