Markets beset by tariff worries could’ve done without a very poor read on a key survey measure of US services sector hiring, but when it rains it pours.

The marquee monthly report on business activity across the biggest part of the world’s largest economy wasn’t all bad on Thursday, but the weak points far outweighed the bright spots.

Most notably, the employment gauge in the ISM services release printed an abysmal 46.2, down sharply from February, the first sub-50 readout in six months and the worst reading since December of 2023.

As the figure shows, the near-8ppt MoM decline was the largest since the onset of the pandemic.

Frankly, nothing else was going to matter in the eyes of traders given the size of that drop. Large declines on the ISM employment indexes can move markets all by themselves, particularly if sentiment’s already impaired, which it plainly was on Thursday.

The anecdotes from panelists actually weren’t that dour under the circumstances, although the word “tariff” came up more than half a dozen times. The headline print from ISM was 50.8, a meaningful miss to the 53 consensus and a nine-month low.

Recall that the factory gauge printed a YTD low earlier this week.

The services new orders index dropped to 50.4, on the brink of contraction. The production index held up, and prices paid receded a bit, but at 60.9, the latter remained too high and when juxtaposed with the suddenly depressed employment gauge, the message is stagflation.

Meanwhile, the final read on S&P Global’s US services index for March was much better, both overall and on the employment index. But chief business economist Chris Williamson warned on the outlook, and in somewhat stark terms.

“[S]ome of the improvement in March reflected better weather [and] the PMI’s future activity index showed optimism edging [down to] the lowest since the end of 2022 barring only the heightened uncertainty seen ahead of last year’s Presidential election,” he said Thursday. “Companies report heightened concerns and uncertainty around the impact of political change, ranging from DOGE-related budget cutting to tariffs and the degree to which foreign demand may be affected by recent policy initiatives.”