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August 3, 2005 1:45 PM, EDT

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he U.S. services sector fell in July, the Institute for Supply Management reported Wednesday.

The index, which measures non-manufacturing companies, fell to 60.5 in July from 62.2 in June, ISM said. That followed a two-year low of 58.5 in May.

ISM figures of more than 50 indicate expansion.

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

The new orders index posted its biggest gain in 18 months, up 2.4 to 61.9, and import and export gauges both grew by 3.5.

The service prices index gained 10.5, to 70.3, ISM said.