The U.S. non-manufacturing sector grew in August for an eighth straight month but at a slower pace than July and at a rate that was below expectations, according to an industry report released on Friday.

The Institute for Supply Management said its index of national services activity fell to 51.5 in August from 54.3 in July. The median forecast of 70 economists surveyed by Reuters was for a reading of 53.5.

A reading below 50 indicates contraction in the manufacturing sector, while a number above 50 means expansion.

The report's employment component fell to 48.2 from 50.9, while new orders dipped sharply to 52.4 from 56.7, suggesting a slowdown in the sector.

(Reporting by Edward Krudy; Editing by James Dalgleish)