The U.S. services sector dropped in August as the non-manufacturing business activity composite index was 51.4 in the month, compared to 55.5 in July, on a seasonally adjusted basis, the Institute for Supply Management reported Tuesday.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
Economists polled by Thomson Reuters had expected a 55.0 level.
The prices paid index dipped to 51.8 from 51.9.
The employment index fell to 50.7 from 51.4.
The business activity/production index fell to 51.8 from 59.3, the new orders index was at 51.4, down from 60.3; backlog of orders slid to 49.5 from 51.0; new export orders decreased to 46.5 from 55.5; inventories dropped to 48.0 from 54.0; inventory sentiment rose to 64.0 from 63.0; the supplier deliveries index grew to 51.5 from 51.0; and imports decreased to 50.5 from 53.0.
Members' general comments on business in the month included:
"Relatively stable August, with no sharp increase or decrease in sales or pricing. Labor availability and cost remains a very high focal point." (Accommodation & Food Services)
"Overall, the oil and gas industry remain in [a] 'wait and watch' mode. The price of oil has impacted investment considerably." (Construction)
"No significant changes to report. Still on track for expansion efforts to begin fourth quarter 2016." (Finance & Insurance)
"Still recovering from the current downturn in the renewable energy market which is expected to pick up in the fourth quarter." (Professional, Scientific & Technical Services)
"Stable with some increase in construction activity." (Public Administration)
"The business environment has softened a bit over the last month. There are now opportunities to fill in the marketplace." (Retail Trade)
"Midyear [is a] slow time for us, summer build is over, fall is historically light, holiday peak build September and October for peak time November and December." (Transportation & Warehousing)
"Good, but slowing from previous months." (Wholesale Trade)
