A report released by the Institute for Supply Management on Tuesday unexpectedly showed a modest slowdown in the pace of growth by U.S. service sector activity in the month of July.
The ISM said its services PMI edged down to 50.1 in July from 50.8 in June. While a reading above 50 still indicates growth, economists had expected the index to rise to 51.5.
The unexpected dip by the headline index came as the business activity index slid to 52.6 in July from 54.2 in June and the new orders index fell to 50.3 in July from 51.3 in June.
The employment index also slipped to 46.4 in July from 47.2 in June, dropping further into contraction territory after one month of expansion in May.
Meanwhile, the ISM said the backlog of orders index climbed to 44.3 in July from 42.4 in June, indicating a slower pace of contraction.
The report also said the prices index jumped to 69.9 in July from 67.5 in June, reaching its highest level since hitting 70.7 in October 2022.