WASHINGTON, Sept. 3 (Xinhua) -- The U.S. service sector expanded in August for the eighth consecutive month, but the pace of growth slowed, an industry research group reported Friday.

The Non-Manufacturing Index (NMI), which measures activity in the service sector, declined to 51.5 last month from 54.3 in July, the Institute for Supply Management (ISM) said in its monthly survey of the service sector.

A reading above 50 indicates a general expanding of the service sector, while a reading below 50 indicates contraction.

The index is closely watched because the service sector absorbs about 80 percent of the U.S. non-farm workforce, and is a key indicator for the overall health of the economy and labor market.

The index showed that new orders, a signal of future business, dropped last month to 52.4 from 56.7 in July. The survey's employment component dipped to 48.2 from 50.9 in July, reflecting contraction after a month of gain, said the ISM.

Nine industries reported growth in August, including real estate, construction and others, while utilities and retail trade were among the eight industries that reported contractions, according to the latest NMI.