The dollar fell against the yen on Tuesday after a lower-than-expected reading on growth in the U.S. non-manufacturing sector raised concerns about the outlook for the economy.

The Institute for Supply Management said its U.S. non-manufacturing sector grew in June for a sixth straight month, but the rate of growth hit its lowest point since February.

The slowdown in the U.S. economy is real, the change in direction is serious, said Joseph Trevisani, chief market analyst at FX Solutions in Saddle River, New Jersey. Statistics do not yet indicate a recession, but the mood is worrying. The dollar will continue to weaken.

The dollar was last down 0.1 percent at 87.61 yen JPY= from 87.79 yen prior to the data.

The euro extended gains versus the dollar and last traded up 0.7 percent at $1.2615 EUR= from $1.2580 before the data. (Additional reporting by Nick Olivari; editing by Jeffrey Benkoe)

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