The pace of growth in the vast U.S. services sector slowed more than expected in April, while new orders dropped, according to an industry report released on Thursday.

The Institute for Supply Management said its services index fell to 53.5 last month from 56.0 in March, missing economists' forecasts for 55.5, according to a Reuters survey.

A reading above 50 indicates expansion in the sector.

The new orders index declined to 53.5 from 58.8, while the employment gauge slipped to the lowest level since December at 54.2 from 56.7.