The Philadelphia Federal Reserve Bank's monthly nonmanufacturing activity index fell to minus 22.0 in September from minus 10.6 in the previous month, compared with the expectations for an increase to minus 8.7 in a survey compiled by Bloomberg.
This indicates a faster pace of contraction in the sector.
The reading for sales decreased while that for new orders, prices and employment increased.
The six-month outlooks at both the regional and firm levels increased, with 30.5% of respondents expecting expansion in the region over the next six months compared with 28.4% that expected contraction.