After reporting strong U.S. service sector growth in the previous month, the Institute for Supply Management released a report on Wednesday showing that the pace of growth in the sector slowed by more than expected in the month of July.
The ISM said its non-manufacturing index declined to 55.5 in July after jumping to a seven-month high of 56.5 in June.
While a reading above 50 indicates continued growth in the service sector, economists had expected the index to show a more modest drop to 56.0.
Nonetheless, Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee, said, "The majority of the respondents' comments reflect stability and continued growth for their respective companies and a positive outlook on the economy."
The bigger than expected decrease by the headline index was partly due to slower job growth in the service sector, as the employment index fell to 51.4 in July from 52.7 in June.
A report released by payroll processor ADP earlier in the day showed that the service-providing sector added 185,000 jobs in July following an increase of 203,000 jobs in the previous month.
While the ISM said the business activity index also edged down to 59.3 in July from 59.5 in June, the new orders index ticked up to 60.3 from 59.9.
The report also said the supplier deliveries index tumbled to 51.0 in July from 54.0 in June, while the inventories index slid to 54.0 from 55.5.
The prices index also slumped to 51.9 in July from 55.5 in the previous month, indicating a slowdown in the pace of price growth.
On Monday, the ISM released a separate report showing a modest slowdown in the pace of growth in the manufacturing sector in the month of July.
The ISM said its purchasing managers index dipped to 52.6 in July from 53.2 in June, while economists had expected the index to come in unchanged.
The drop by the manufacturing index came after it hit its highest level since reaching 53.3 in February of 2015 in the previous month.
by RTT Staff Writer
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