The giant U.S. service sector zipped ahead for a fourth straight month in July, beating expectations to expand at the fastest clip on record, a report showed on Tuesday.

The Institute for Supply Management (search) said its index of non-manufacturing activity (search) surged in July to 65.1, the highest level since the survey was first conducted in July 1997, from 60.6 in June.

The results were a welcome surprise to Wall Street economists, who had forecast a drop in the measure to 58.0.

A reading above 50 denotes growth in the vast industry, which encompasses everything from restaurants and retail stores to banks and tourism, and comprises about 80 percent of the U.S. economy. A figure below 50 indicates contraction.

ISM surveys 370 purchasing and supply-chain managers in 62 industries for its non-manufacturing indexes. Survey responses reflect changes compared with the previous month.