The Purchasing Managers Index for non-manufacturing businesses, already above the break-even point of 50, rose from 52.2 to 56, indicating the rate of expansion accelerated in the month.
New business orders expanded at a faster pace with the index rising from 50.8 to 57.7. A contraction in new export orders, however, slowed with a June level of 47.5 rising to 49.5.
The index measuring the number of employees showed slower contraction, as the index fell to 53.2 from 54.7. The index measuring inventories also showed slower growth as that index dropped from 54.5 to 53.5.
The institute said 16 of 18 service-oriented industries showed growth in the month with the fasted growth posted by arts, entertainment and recreation, followed by construction, information, and wholesale trade.
Mining, education, and healthcare and social assistance contracted, ISM said.