ISM's non-manufacturing survey for June came in at 56.0.
Expectations were for the report to come in at 56.3, unchanged from last month.
The report's employment index rose 2 points to 54.4 from 52.4 in May.
New orders rose to 61.2 from 60.5, while prices fell 0.2 to 61.2.
Following the report, Pantheon Macro said, "In one line: Solid, but probably understate payrolls for the foreseeable future... The headline index tends to reflect the strength — or otherwise — of the recent core retail sales numbers, which have been pretty good... The ISM survey does not capture the state of very small companies, which we think are recovering rapidly."
Cooper Howes at Barclays notes that with this reading, the average for the second quarter stands at 55.8, the strongest quarter since the third quarter of last year.
The data comes after what has been a huge day already as the U.S. jobs report showing the economy added 288,000 in non-farm payrolls in June, blowing away expectations.
This chart from ISM shows the month-over-month changes in its non-manufacturing survey.
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