U.S. services sector activity slowed in November as lingering concerns about trade tensions and worker shortages pushed production to its lowest level in a decade, which could heighten fears about the economy's health.

Other data on Wednesday showed private employers hired the fewest workers in six months in November. The reports came on the heels of data on Monday showing manufacturing activity contracted for the fourth straight month in November and a decline in construction spending in October.

The continued manufacturing slump and second straight monthly drop in construction outlays tempered growth expectations for the fourth quarter, which had been boosted by a rush of upbeat reports on the trade deficit, housing and business investment. Still, the economy appears to be growing at a moderate pace rather than stalling.

Trade tensions constrain growth

Growth is being constrained by the Trump administration's "America First" policy, which has seen the United States embroiled in a trade war with China, and tit-for-tat tariffs with other nations. The trade tensions, which have eroded business confidence, come as the stimulus from last year's 1.5 trillion U.S. dollars tax cut package is fading.

The Institute for Supply Management (ISM) said its non-manufacturing activity index fell to a reading of 53.9 last month from 54.7 in October. A reading above 50 indicates expansion in the services sector, which accounts for more than two-thirds of U.S. economic activity.

Economists polled by Reuters had forecast the index dipping to a reading of 54.5 in November. The survey's production index tumbled 5.4 points to 51.6, the lowest level since November 2009, as tariffs on imports, including steel and aluminum raised costs for businesses. A measure of prices paid by services industries jumped 1.9 points to 58.5 last month.

"The decline in the index in November seems to reflect the tariffs that are impacting the prices of many products that services companies use to provide their services to other companies and consumers," said Chris Rupkey, chief economist at MUFG in New York. "China is not paying for all the tariffs apparently.”

President Donald Trump has repeatedly claimed that China was paying the tariffs in the 17-month trade war.

The dollar fell against a basket of currencies, while U.S. Treasury yields rose. Stocks on Wall Street were trading higher.

Labor market slowing 

The ISM said services industry businesses "hope for a resolution on tariffs and continue to be hampered by constraints in labor resources." It said 12 industries, including retail trade, utilities and information, reported growth last month. Five industries, including agriculture, mining and construction reported a contraction.

But key details of the ISM survey were upbeat. New orders picked up last month, though order backlogs contracted.

A measure of services industry employment rose to 55.5 from 53.7 in October. This supports economists' expectations that the government's closely watched employment report on Friday would show a sharp rebound in job growth in November, despite the paltry job gains reported by private employers last month.

Private employers added only 67,000 jobs in November, according to the monthly ADP National Employment Report, produced by the ADP Research Institute in collaboration with Moody's Analytics. It was the smallest monthly gain since May when just 46,000 jobs were created, the fewest since 2010, and continued a trend of decelerating job growth that has taken hold this year.

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

"In November, the labor market showed signs of slowing," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. "The goods producers still struggled; whereas, the service providers remained in positive territory driven by healthcare and professional services."

Job creation slowed across all company sizes, Yildirmaz said, adding that small companies continued to face more pressure than their larger competitors.

"The job market is losing its shine. Manufacturers, commodity producers, and retailers are shedding jobs," said Mark Zandi, chief economist of Moody's Analytics.

Job openings are declining and if job growth slows any further, unemployment will increase, said Zandi.

(With input from Reuters and Xinhua)