The Institute for Supply Management (ISM) reported on Monday its non-manufacturing index (NMI) came in at 53.7 in July, which was 1.4 percentage points lower than the June reading of 55.1 percent. The July reading pointed to the slowest expansion in the services sector since August 2016.

Economists forecast the index to increase to 55.5 last month. A reading above 50 signals expansion, while a reading below 50 indicates contraction.

Of the 18 manufacturing industries, 13 reported growth last month, the ISM said, adding that respondents indicated ongoing concerns related to tariffs and employment resources.

According to the report, the ISM’s non-manufacturing business activity measure fell to 53.1 percent, 5.1 percentage points lower than the June reading of 582 percent. That reflected growth for the 120th consecutive month, at a slower rate in June. The new orders gauge decreased to 54.1 percent, 1.7 percentage points lower than the reading of 55.8 percent in June. The Prices Index dropped 24 percentage points from the June reading of 58.9 percent to 56.5 percent, indicating that prices increased in July for the 26th consecutive month. Meanwhile, the employment indicator rose 1.2 percentage points in July to 56.2 percent from the June reading of 55 percent.

 Commenting on the data, the Chair of the ISM Non-Manufacturing Business Survey Committee, Anthony Nieves, noted, "The past relationship between the NMI and the overall economy indicates that the NMI for July (53.7 percent) corresponds to a 1.8-percent increase in real gross domestic product (GDP) on an annualized basis.”