NEW YORK (CNN/Money) - Growth in the U.S. services sector accelerated in July, a purchasing managers' group reported Wednesday, marking the 16th consecutive month of expansion in the sector as the reading came in well ahead of economists' estimates.

The Institute for Supply Management's services index came in at 64.8 in July, up from a reading of 59.9 in June. Wall Street had expected the index to come in at 61.5, according to Briefing.com.

A reading of over 50 indicates expansion in the sector, while a reading of below 50 signals contraction.

While most aspects of the index, including backlogs, new orders and inventories increase, the prices businesses paid showed growth for the 28th consecutive month at 73.1 percent, although at a slightly slower rate than June's 74.6.

The inflationary pressures have some managers concerned. The report quoted one manager as saying "Higher fuel prices are causing price increases in many other supplies and services."

Managers also commented that several supplies are in short supply, including concrete, electronic parts, laboratory equipment and steel.

Employment in the sector cooled, as it was unchanged in July with a reading of 50.0, down sharply from the expansion of 57.4 percent in June.

The accelerating services sector in July emphasizes what some economists had called a recovery soft-patch in June.

Last month, the ISM services index dipped from May's 65.2, and the Commerce Department's consumer spending reading for June came in far below expectations, with a drop in demand for durable goods leading the way, although spending on services remained steady.