WASHINGTON, May 4 Reuters U.S. services industry growth unexpectedly slowed in April, with employment contracting for the second time this year, while a measure of input prices raced to a record high.

The Institute for Supply Management said on Wednesday its nonmanufacturing activity index fell to a reading of 57.1 last month from 58.3 in March. Economists polled by Reuters had forecast the nonmanufacturing index little changed at 58.5.

A reading above 50 indicates expansion in the services sector, which accounts for more than twothirds of U.S. economic activity. The surprise slowdown could reflect persistent supply constraints, which have been worsened by new COVID19 lockdowns in China and Russia39;s war against Ukraine.

Coming on the heels of an ISM survey on Monday showing manufacturing growing at its slowest pace in more than 112 years in April, the slowdown in the services industry could be a potential red flag for the economy.

The economy contracted at a 1.4 annualized rate in the first quarter, though that was largely because of a record trade deficit. Domestic demand remained solid, with consumer spending rising and business investment on equipment accelerating.

The ISM39;s measure of new orders received by services businesses fell to 54.6 from a reading of 60.1 in March. The moderation came despite spending shifting back to services from goods. Order backlogs also increased at a slower pace relative to March and exports cooled.

Its services industry…