A report from Institute for Supply Management (ISM) showed the U.S. manufacturing sector expanded in July, and the overall economy grew for the 98th consecutive month.

The ISM's index of manufacturing activity came in at 56.3 percent last month, down 1.5 percentage points from the June figure of 57.8 percent, missing economists' forecast for a 56.5 percent reading. A reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.

According to the report, orders for new goods decreased to 60.4 percent last month from 63.5 percent in the prior month, production fell to 60.6 percent from 62.4 percent, and employment index dropped to 55.2 percent from 57.2 percent. At the same time, inventories rose to 50 percent in July from the June reading of 49 percent, while the prices index increased to 62 percent last month from 55 percent in the prior month.

Of the 18 manufacturing industries, 15 reported growth in July.

Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee said, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through July (56.4 percent) corresponds to a 4.1 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI for July (56.3 percent) is annualized, it corresponds to a 4.1 percent increase in real GDP annually."