Partly reflecting concerns about tariffs, the Institute for Supply Management released a report on Thursday showing growth in the U.S. service sector slowed by more than anticipated in the month of September.

The ISM said its non-manufacturing index dropped to 52.6 in September after climbing to 56.4 in August. While a reading above 50 still indicates service sector growth, the index has been expected to show a more modest dip to 55.0.

With the much bigger than expected decrease, the non-manufacturing slumped to its lowest level since hitting 51.8 in August of 2016.

"The non-manufacturing sector pulled back after reflecting strong growth in August," said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.

He added, "The respondents are mostly concerned about tariffs, labor resources and the direction of the ."

The bigger than expected drop by the headline index came as the activity index tumbled to 55.2 in September from 61.5 in August and the new orders index plunged to 53.7 from 60.3.

The employment index also slid to 50.4 in September from 53.1 in August, indicating only modest job growth in the service sector.

On the other hand, the report said the prices index rose to 60.0 in September from 58.2 in August, pointing to a faster rate of price growth.

The ISM released a separate report on Tuesday showing U.S. manufacturing activity continued to contract in the month of September.

The purchasing managers index dropped to 47.8 in September from 49.1 in August, with a reading below 50 indicating a contraction in manufacturing activity. Economists had expected the index to inch up to 50.1.

With the unexpected decrease, the index fell to its lowest level since hitting 46.3 in June of 2009, the last month of the Great Recession.

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