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Activity across the U.S. service sector slumped in November, the latest indication that an escalating trade war is weighing on businesses.

The Institute for Supply Management’s nonmanufacturing gauge fell to 53.9 last month from 54.7 in October. The decline was sharper than expected, with economists surveyed by Bloomberg looking for a small drop to 54.5.

The reading looks worse when considering a main subindex (there are 10). Production dropped to the worst level since the start of 2010.

The impact from the U.S.-China trade spat is increasingly hard to dismiss. A separate report this week from the ISM showed U.S. factories are languishing, with blame falling in large part on tariffs.

And Wednesday’s reading on the service sector shows rising trade uncertainty is having a broader impact on business activity. In one of the biggest drags on the composite service-sector index, imports fell for the third straight month and at an accelerating pace.

Quadratic Capital CIO and founder Nancy Davis makes a contrarian call on Germany and the U.S. potentially getting into a trade war with one another ahead of the 2020 election.

One respondent, an executive in support services, put it this way: “Tariffs are impacting prices for a broad array of products … and upward pressure is impacting suppliers and their pricing to customers.” The commentator added that numerous suppliers say they’re looking for alternative manufacturing and supply locations outside of China, but so far success has been limited.

Others agree. Prices for an array of products used in the delivery of services and projects rose at a faster pace and across most industries, the report shows.

Investors will get a better look next week at whether price inflation is picking up more broadly. The latest read on consumer prices is due out next Wednesday, which will show whether changes at the wholesale level are flowing through to consumers.

Write to Lisa Beilfuss at lisa.beilfuss@barrons.com