The U.S. service sector contracted in July, but at a slower rate than in June, according to the Institute for Supply Management's nonmanufacturing index released today. The index rose to 49.5 in July from 48.2 in June. Readings above 50 indicate expansion.

Employment in the services sector also contracted at a slower rate in July than in June. The employment portion of the index rose to 47.1 in July from 43.8 in June.

The report is based on a survey of purchasing and supply executives across the country.