Service sector grows, but at slower rate By CHRISTOPHER S. RUGABER, AP Business Writer

Service sector grows, but at slower rate By CHRISTOPHER S. RUGABER, AP Business Writer
1 hour, 5 minutes ago



WASHINGTON - The U.S. service sector expanded in July though at a slower pace than the previous month, a trade group said Friday, suggesting that economic growth is moderating.

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The Tempe, Ariz.-based Institute for Supply Management, an organization of corporate purchasing executives, said that its index of business activity in the non-manufacturing sector registered 55.8 in July, down from 60.7 in June.

Wall Street economists were expecting a reading of 59, according to Thomson Financial/IFR. Readings above 50 indicate economic expansion and below 50 indicate contraction.

July's decline is consistent with economists' expectations that the economy will slow in the second half of this year from last quarter's 3.4 percent annual growth rate.

"The pace of activity is throttling down a notch or two," Brian Bethune, U.S. economist at Global Insight, a consulting firm, said this week.

The Dow Jones industrial average fell 91.37 points to 13,371.96 in reaction Friday morning after receiving an earlier report that job growth in July was slower than anticipated.

The ISM July report also showed significant slowing in employment and new orders. Surprisingly, prices paid for goods and services, which could reduce inflation pressures, also dropped.

The new orders index was 52.8, below June's reading of 56.9, while the employment index came in at 51.7, down from 55 in June.

The prices paid index was 61.3, down from June's reading of 65.5, the second consecutive monthly decline.

That follows a similar reduction in prices paid by manufacturers last month as reported Wednesday. The ISM manufacturing survey's index prices paid index fell to 65 from 68.

New export orders fell to 52.5 in July, down from 59 in June.

"Members' comments in July are mixed about business conditions," Anthony Nieves, chair of the ISM's survey committee, said. "The overall indication in July is continued economic growth in the non-manufacturing sector, but at a slower pace than in June."

Nine of the 15 industries tracked by the index reported growth in July, including retail trade, transportation and warehousing, and finance and insurance. The six industries reporting decreased activity include agriculture, real estate and professional services.