Service sector grew at slower pace in July

The service sector grew at a slower pace in July, and a dip in a key measure of employment could point to more modest job growth in this week's closely-watched payroll report.

The Institute for Supply Management’s non-manufacturing index slipped to 55.5 in July from 56.5 in June, slightly below the 56 ​forecast by economists in a Bloomberg survey. A reading above 50 indicates the sector is growing.

The non-manufacturing index has shown solid growth in the sector for more than six years. Services make up about 80% of the economy.

Service-sector employment declined to 51.4 from 52.7 the previous month. That could be consistent with economists' estimates of 180,000 job gains in the Labor Department's closely watched employment report this Friday, down from 287,000 additions in June.

New orders ticked up to 60.3 from 59.9, a positive sign for production in coming months. The business activityindex edged down 0.2 points to 59.3.

The report shows growth in 15 services industries and contraction in three.