Economic activity in the manufacturing sector expanded in July at a slower pace than in June, according to the Institute for Supply Management’s purchasing managers index for US manufacturing. July’s index reading registered 56.3, down from June’s three-year high of 57.8.

Any reading above 50% generally indicates improving conditions.

The employment portion of the index fell to a reading of 55.2 in July from 57.2 in June, also indicating expansion at a decreased pace.

Reuters reported manufacturing is slowing as a boost from the energy sector ebbs following a burst in oil well drilling activity. It is also being hurt by declining automobile production as companies respond to falling sales that have left them with an inventory bloat; motor vehicle production has dropped for three straight quarters.