The dominant service sector grew at its fastest rate in a year in May, confounding market expectations for a slightly slower pace, according to a report released on Tuesday.
The Institute for Supply Management's services index rose to 59.7 in May from 56.0 in April. The median forecast among analysts polled by Reuters was for a slight decline to 55.3. A number above 50 indicates growth in the sector.
May's reading was the highest since April 2006.
"This is a very strong number and a key piece of the recent strength we've seen in U.S. data," said Ashraf Laidi, senior foreign exchange analyst at CMC Markets in New York.
The survey's new orders component rose to 57.4 in May from 55.5 in April.
The prices-paid index increased to 66.4 in May from 63.5 and the jobs gauge improved to 54.9 in May from 51.9 in April.
The services sector represents about 80% of U.S. economic activity, including businesses such as restaurants, hotels, hair salons, banks and airlines.