The latest report by IHS Markit revealed on Tuesday the seasonally adjusted final IHS Markit U.S. Services Business Activity Index (PMI) came in at 54.9 in September, down from 55.1 in August but slightly above the earlier released “flash” estimate of 54.4. The latest reading pointed to the slowest growth in business activity across the U.S. service sector since December 2020.

Economists had forecast the index to stay unrevised at 54.4.

According to the report, output growth decelerated amid the slowest rise in new business for 13 months and labour shortages. Total sales were weighed down by the spread of COVID-19 and a faster decrease in new export orders. At the same time, pressure on capacity was reflected in the steepest increase in backlogs of work since data collection began almost 12 years ago. Challenges expanding workforce numbers reportedly exacerbated difficulties clearing incoming new business. On the price front, cost pressures built for a second month running as input prices grew at a sharp rate. Firms continued to pass on higher costs to clients, but at the slowest pace for five months.