The Purchasing Managers Index for non-manufacturing businesses rose from 54.7 to 56.1, a gain of 1.4 percentage points.
With numbers above 50 indicating expansion, the index has shown growth for service industries for three years running, ISM said.
The index for new orders for non-manufacturing businesses rose from 58.1 to 59.3. The production index slid from 61.2 to 60.3, indicating slower growth than November. Both new orders and production, however, have risen for 41 consecutive months as of December, the institute said.
The Employment Index, up five consecutive months, jumped from 50.3 to 56.3, indicating faster growth.
Thirteen of 18 service industries reported growth in December, an improvement from November when 11 of 18 reported growth.
Information, construction and retail showed the strongest growth while contraction was noted in accommodation and food services; professional, scientific and technical services; wholesale trade; educational services, and company management.