The index follows its sister series on manufacturing, which is showing that sector keeps buffering New Zealand from the worst of the global downturn as local producers look to sell their wares across the Tasman.
Business NZ chief executive Phil O'Reilly said the decline in employment was "disappointing given it had managed to keep its head above water for the previous five months."
Earlier this month government data showed the unemployment rate was stable at 6.5 per cent in the three months ended June 30, though employers in retail and accommodation shed 22,000 staff in the period to 325,000.
Still, retail trade managed to grow last month, gaining 7.9 points to 50.4 on the PSI, as did accommodation, cafes and restaurants, which increased 5.8 points to 50.4. Wholesale trade slipped 2.9 points to 49.9, while health & community services declined 0.8 points to 55.9.
The Central region led the growth in July at 54.1, followed by Northern region with 53.5. Canterbury/Westland dropped 13.8 points to 45.4, while Otago/Southland was at 46.
