ISM: Services Sector Rebounds From Slow June

The U.S. services sector (search), which accounts for 80 percent of the economy, expanded in July in a recovery from a surprise slowdown in June, an industry survey showed Wednesday.

However, the survey's employment component shrank despite overall expansion in the Institute for Supply Management (search) non-manufacturing index, whose headline number rose to 64.8 in July from 59.9 in June. This was above Wall Street estimates of a rise to 61.0. A number above 50 indicates growth.

The survey's employment index fell in July, to 50.0 from 57.4, while the new orders component rose to 66.4 from 62.4.

"The overall headline is pretty much along the lines of other July data -- encouraging after the slowdown in June," said Steve Gallagher, economist at SG Cowen Securities in New York. "But then we add the employment component and it takes a lot of punch out of the headline."

In reaction, the euro initially fell against the dollar, trading at $1.1972 soon after the report from about $1.1990 shortly prior. The dollar rose against the yen, trading at about 111.54 yen from about 111.40 yen shortly before the survey was released.

The giant services sector includes everything from restaurants and hotels to banks and airlines.