U.S. Service Sector Growth Slows in January

The U.S. service sector continued expanding in January, suggesting the domestic economy remains stable despite increasing headwinds from abroad.

The Institute for Supply Management said its gauge of nonmanufacturing activity fell to 53.5 in January, down from December's reading of 55.8. A reading above 50 indicates the service sector is expanding.

Economists surveyed by The Wall Street Journal had expected the index to register at 55 in January.

Manufacturing activity has tumbled amid weak global demand, a strong dollar and low oil prices. The service sector, meanwhile, has been aided by strong job growth and accelerating wages, as Americans spend more of their money on services such as rent and health care rather than goods.

The service sector represents between 80% and 90% of the economy.

Write to Kate Davidson at kate.davidson@wsj.com