Service sector activity in the US grew at a slower pace than expected in July according to purchasing managers in the US, data on Thursday revealed.
The Institute for Supply Management reported its headline index of business activity in the non-manufacturing sectors fell to 53.9 in July from 57.4 in June, falling short of an expected 57 reading.
While the index fell in July, activity in the services sectors still expanded. Any figure above 50 represents growth.
New orders fall
One of the biggest contributing factors behind the fall in the headline index was slower growth in new orders, with survey respondents reporting slowing business volumes as early as June.
The report tallied with Tuesday's data, which surveyed the manufacturing sector in July. The headline index slipped to 56.3 from 57.8 – a smaller fall from a higher starting level – but, nonetheless, evidence of slowing activity.
Here too, slowing new order growth was a contributory factor behind the fall in the main index.
Outlook remains stable
While both indices were weaker than in previous months, many respondents were upbeat about the outlook.
Many had expected some softening at this time of year, with summer purchases and output in the services industries hitting peak levels in June and July, and now waiting for activity to pick up again in the autumn.
James Knightley, chief international economist at ING, said: "We have to remember that the ISM indices have both been recently running at levels historically consistent with above-4% GDP growth."
He added: "Today's move merely brings them back into line with the story told by the official activity data rather than pointing to something more ominous."