ISM Services Index Improves, But Still Shows Contraction

The U.S. economy’s service sector contracted in July for a second straight month, the Institute for Supply Management said Tuesday.

ISM’s monthly services index rose to a reading of 49.5, from 48.2 in June, the group said. The index had hit a record low of 44.6 in January.

The services index measures non-manufacturing components of the economy. Figures of more than 50 indicate expansion, while below that shows contraction.

Economists had forecast a reading of 48.8, Bloomberg News reported.

The services sector, which includes transportation, retail sales and financial services, accounts for nearly two-thirds of the U.S. gross domestic product.