WASHINGTON (Reuters) - Hiring by U.S. private employers slowed further in September, suggesting that trade tensions, which have pressured manufacturing, could be spilling over to the labor market.

FILE PHOTO: People wait in line to attend TechFair LA, a technology job fair, in Los Angeles, California, U.S., January 26, 2017. REUTERS/Lucy Nicholson

The ADP National Employment Report on Wednesday also showed private payrolls growth in August was not as strong as previously estimated, and said “businesses have turned more cautious in their hiring,” with small enterprises becoming “especially hesitant.”

It came on the heels of a survey on Tuesday showing manufacturing activity tumbled to a more than 10-year low in September. The reports added to cooling consumer spending in suggesting that the economy was losing momentum, though a recession is probably not on the horizon.

The economy’s darkening outlook was also underscored by another report on Wednesday showing a measure of current business conditions in New York City dropped to a 40-month low in September.

The longest economic expansion on record, now in its 11th year, is losing ground with the blame largely put on a 15-month trade war between the United States and China, which has eroded business confidence.

Slowing job growth is a concern as it could curb consumer spending, which has been the economy’s main growth engine.

Private employers added 135,000 jobs in September, the ADP National Employment report showed. Data for August was revised downward to show private payrolls increasing by 157,000 jobs instead of the previously reported 195,000 positions.

“We continue to believe that the underlying trend in job growth has slowed lately but that it remains decent,” said Daniel Silver, an economist at JPMorgan in New York.

Economists polled by Reuters had forecast private employment rising by 140,000 jobs in September.

The dollar was little changed against a basket of currencies, while U.S. Treasury prices rose. Stocks on Wall Street dropped to one-month lows.

WEAKER EMPLOYMENT REPORT?

The ADP figures come ahead of the Labor Department’s more comprehensive nonfarm payrolls report due out on Friday, which includes both public- and private-sector employment.

The ADP report, which is jointly developed with Moody’s Analytics, has a poor record predicting the private payrolls component of the government’s employment report. However, last month’s job gains fit in with economists’ expectations for moderate nonfarm payrolls growth in September.

Some analysts believe a weaker employment report is likely.

“I believe that Friday’s nonfarm payrolls will come in weaker than forecast,” said Kevin Giddis, chief fixed income strategist at Raymond James in Memphis, Tennessee. “In my opinion, a number below 100,000 is likely more probable. It just has that feeling.”

According to a Reuters survey of economists, nonfarm payrolls probably increased by 145,000 jobs in September, after rising 130,000 in August. Job gains have averaged 158,000 per month this year, above the roughly 100,000 needed each month to keep up with growth in the working age population.

The unemployment rate is forecast unchanged at 3.7% for a fourth straight month.

The ADP report showed employment in the goods-producing sector increased by 8,000 jobs in September. Manufacturing payrolls rose by 2,000 jobs last month and construction added 9,000 positions. Natural resources and mining shed 3,000 jobs.

The services sector added 127,000 jobs last month, with gains concentrated in education and health services, professional and business services, and trade, transportation and utilities industries.

In a separate report on Wednesday, the Institute for Supply Management-New York current business conditions index dropped to a reading of 42.8 last month, the lowest since May 2016, from 50.3 in August. Businesses were also downbeat about the outlook over the next six months.

The survey’s six-month outlook gauge tumbled 26.2 points to 45.2 in September, the lowest reading since February 2009. Its employment measure dropped to a 19-month low of 52.5 from 69.0 in August.

“Purchasing managers are struggling and are more nervous about the future than they have been at any point since the Great Recession,” said Adam Kamins, an economist at Moody’s Analytics in West Chester, Pennsylvania.

But there was some encouraging news on the housing market, which has been struggling since hitting a soft patch last year. The Mortgage Bankers Association said applications for loans to purchase a home increased 10% last week from a year ago.

The report added to data on homebuilding, building permits and home sales in suggesting that the housing market slump had probably run its course. Residential investment has contracted for six straight quarters, the longest such stretch since the Great Recession.

The housing market is being lifted by lower mortgage rates, thanks to interest rate cuts by the Federal Reserve.