The numbers: An ISM barometer of business conditions at companies such as hotels and restaurants dipped to 56.7% in September. Yet the survey also showed fairly strong growth and rising employment in a sign the broader economy is OK.
Numbers over 50% are viewed as positive for the economy, and anything over 55% is considered exceptional.
Economists polled by The Wall Street Journal had expected the index to drop to 56%.
The snapshot of the economy painted by the service index contrasted with a similar ISM survey of manufacturers that showed growth slowing to a more than two year low.
Big picture: The economy appears to be doing OK for now, but the future looks dimmer.
The Federal Reserve is raising interest rates sharply to squelch the worst inflation in almost 41 years, but higher rates usually slow the economy and sometimes can even trigger a recession.
Market reaction: The Dow Jones Industrial Average
and S&P 500
fell in Wednesday trades.