(RTTNews) - Activity in the U.S. service sector grew at a slower than expected pace in July, the Institute for Supply Management revealed in a report released on Wednesday, with the nation's purchasing and supply executives indicating that business conditions are flattening out. The ISM said its non-manufacturing index dropped to a reading of 52.7 in July from a reading of 53.3 in June. While a reading above 50 indicates continued growth in the service sector, economists had been expecting a more modest decrease to a reading of 53.0.
With the bigger than expected decrease, the non-manufacturing index fell to its lowest level since coming in at 50.7 in January of 2010.
A slowdown in the pace of new orders growth contributed to the overall slowdown in the sector, with the new orders index falling to 51.7 in July from 53.6 in June.
The employment index also dipped to 52.5 in July from 54.1 in June, indicating a slowdown in the pace of job growth in the service sector.
On the other hand, the ISM said that the business activity index rose to 56.1 in July from 53.4 in June, pointing to a faster rate of growth than in the previous month.
"Respondents' comments remain mixed," said Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee. "However, for the most part they indicate that business conditions are flattening out."
With regard to inflation, the report showed that the prices index dropped to 56.6 in July from 60.9 in June, suggesting a notable slowdown in the pace of price growth.
Monday morning, the ISM released a separate report showing slower than expected growth in the manufacturing sector in the month of July.
The ISM said its index of activity in the manufacturing sector fell to a reading of 50.9 in July from a reading of 55.3 in June, while economists had been expecting the index to show a much more modest decrease to a reading of 54.3.
