The U.S. services sector dropped in July as the non-manufacturing business activity composite index was 55.5 in the month, compared to 56.5 in June, on a seasonally adjusted basis, the Institute for Supply Management reported Wednesday.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
Economists polled by Thomson Reuters had expected a 56.0 level.
The prices paid index dipped to 51.9 from 55.5.
The employment index fell to 51.4 from 52.7.
The business activity/production index fell to 59.3 from 59.5, the new orders index was at 60.3, up from 59.9; backlog of orders rose to 51.0 from 47.5; new export orders increased to 55.5 from 53.0; inventories dropped to 54.0 from 55.5; inventory sentiment rose to 63.0 from 62.5; the supplier deliveries index fell to 51.0 from 54.0; and imports decreased to 53.0 from 54.0.