Activity in the US services sector, the driver of the world's largest economy, rose more than expected in July, data showed Tuesday.
The Institute for Supply Management (ISM) said its non-manufacturing purchasing managers index (PMI) jumped to 58.7 last month.
That represents an increase of 2.7 percentage points compared with June, while analysts had projected a rise of just 0.5 of a point.
The index measures activity in 17 industries, including construction, real estate, retail trade, accommodation and food services, and management of companies. The only sector to contract in July was utilities.
"Respondents' comments indicate that stabilization and/or improving market conditions have positively affected the majority of the respective industries and businesses," ISM said.
A reading over 50 indicates growth, while a reading below that level signals a contraction.
The July report marks the 54th straight month the ISM report has shown expansion.
The report indicated growth in business activity, new orders and employment. However, the prices index decreased 0.3 of a point from the June level to 60.9.
Jim O'Sullivan, chief US economist at High Frequency Economics, characterized the report as "much stronger than expected, adding to the growing list of data showing a net pick-up in the trend in growth this year."