US business activity expanded in April at the slowest pace this year on a pullback in demand that led to the first decline in employment since 2020.

The S&P Global flash April composite index of output at manufacturers and service providers slipped 1.2 points, the most since August, to 50.9. Readings above 50 indicate expansion. The composite measure of orders showed the first contraction in six months.

The group’s measure of employment slid 3.2 points to 48, reflecting shrinking services payrolls and slower growth at manufacturers. The composite index of prices received, meanwhile, pulled back from a 10-month high.

“The US economic activity lost momentum at the start of the second quarter,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement. “April saw inflows of new business fall for the first time in six months and firms’ future output expectations slipped to a five-month low amid heightened concern about the outlook.”

“The more challenging business environment prompted companies to cut payroll numbers at a rate not seen since the global financial crisis if the early pandemic lockdown months are excluded,” Williamson said.

The decline in the employment measure suggests companies see current capacity as sufficient to handle demand. Order backlogs remained in contraction territory during the month.

New business at service providers shrank for the first time since October, with some firms indicating higher borrowing costs and still-elevated prices were limiting demand.

The overall index for services activity decreased to the lowest level in five months, while the manufacturing PMI showed a slight contraction.

This article was provided by Bloomberg News.