The U.S. services sector shrank again in August, but an index measuring activity was at its highest in nearly a year, according to an industry report released on Thursday.

The Institute for Supply Management said its services index rose to 48.4 in August from 46.4 in July. That was slightly above the 48.0 median forecast of 70 economists surveyed by Reuters.

A reading above 50 indicates expansion in the sector. The last time the index was at the 50 mark was September 2008.

The index's business activity component rose to 51.3, up from 46.1 in July. The August reading was its first above 50 since last September.

The services sector represents about 80 percent of U.S. economic activity and includes businesses such as banks, airlines, hotels and restaurants.

(Reporting by Steven C. Johnson; Editing by James Dalgleish)