Non-manufacturing economic activity grew at a slower pace than expected in July, declining 3.5 points compared to the previous month.
The Institute for Supply Management's index registered 53.9 in July, below estimates of 57 by economists surveyed by Thomson Reuters.
"The non-manufacturing sector did not sustain the previous rate of growth and cooled-off in July," Anthony Nieves, chair of the ISM survey committee, said in a statement.
A reading above 50 for the index indicates expansion in the service sector, and a reading below 50 indicates contraction.
Fifteen of the 17 non-manufacturing industries surveyed reported growth in July. Two industries—"management of companies & support services" and "agriculture, forestry, fishing and hunting," reported contraction.
The business activity index decreased 4.9 percentage points in July from June, while still reflecting growth for a 96th consecutive month.
The new orders index also registered lower at 55.1 in July, 5.4 percentage points lower than the reading of 60.5 in June.
The employment index decreased 2.2 percentage points in July to 53.6 percent, continuing month-over-month declines seen in June.