The Chicago Business Barometer rose to 65.7 in June from 59.4 in May.
This was the highest reading since May 2014.
The data is compiled on a seasonally adjusted basis. An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
Economists polled by Thomson Reuters predicted a 58.0 reading for the index.
“Optimism among firms about business conditions rose for the fifth consecutive month,” according to a release. “Four of the five Barometer components led June’s increase, with only Employment falling, albeit slightly. Successive rises in the barometer left the Q2 calendar quarter average at 61.1, significantly above Q1’s 55.1, and the highest level since Q2 2014.”