In a report, the Institute of Supply Management said its non-manufacturing purchasing manager's index rose to 55.4 in October from a reading of 54.4 in September.
Analysts had expected the index to decline to 54.0 last month.
On the index, a reading above 50.0 indicates the non-manufacturing sector economy is generally expanding, below 50.0 indicates the sector is contracting.
The New Orders Index decreased by 2.8 points to 56.8, while the Employment Index increased 3.5 points to 56.2, indicating growth in employment for the 15th consecutive month.
Following the release of the data, the U.S. dollar added to gains against the euro, with EUR/USD shedding 0.47% to trade at 1.3451.
Meanwhile, U.S. stock markets remained lower. The Dow Jones Industrial Average fell 0.65%, the S&P 500 index declined 0.6%, while the Nasdaq Composite index dipped 0.6%.