Mill begins Utiltarianism by making a case for hedonism (pleasure-seeking):

"Actions are right in proportion as they tend to promote happiness; wrong as they tend to produce the reverse of happiness. By happiness is intended pleasure and the absence of pain; by unhappiness, pain and the
privation of pleasure. Pleasure and freedom from pain are the only things desirable as ends; and all desirable things are desirable either for pleasure inherent in themselves or as means to the promotion of pleasure and the prevention of pain".

Here, Mill claims that pleasure is the only intrinsic good, a hedonistic statement. However, it is important that we read this remark in its broader context. Just like most hedonists, Mill points out that “pleasure” does not refer merely to “brutish” physical pleasures, but to all types of pleasure, whether physical, emotional, intellectual, aesthetic, or otherwise. But unlike hedonists, Mill goes on to generalize “pleasure” to something other than mere enjoyable feelings or sensations. Utilitarianism provides us with a variety of examples. For one, Mill says “to think of an object as desirable and to think of it as pleasant are one and the same thing,”and “what is the principle of utility if it be not that ‘happiness’ and ‘desirable’ are synonymous terms?”

Mill also says that “With much tranquility, many find that they can be content with very little pleasure,”
and “It is better to be Socrates dissatisfied than a pig satisfied.”

So “pleasure” is not even a necessary term for the ultimate good, but just one of many terms Mill uses synonymously to identify whatever it is to which the greatest happiness principle refers.  Further on in his essay he gives a fuller definition of happiness that includes activity and expectations: Mill begins by saying "pleasure, and freedom from pain, are the only things desirable as ends" but then later says "happiness is…moments of rapture…in an existence of few and transitory pains, many and various pleasures, with a predominance of the active over the passive..not to expect more from life than it is capable of bestowing" (p144). Here he moves beyond pleasure as a psychological state, and talks about activity and expectations, both very different things to pleasure as feeling.

This is not unlike Aristotle’s initial identification of the ultimate end of action as "flourishing", well being, or
“happiness” (the standard translation of eudaimonia). Everyone agrees that happiness is the goal of life, Aristotle says, but not everyone agrees about what exactly constitutes happiness; therefore an inquiry into the nature of the good life is required in order to give a proper account of happiness. At this point in Aristotle’s discussion, “happiness” is a mere token for whatever the good life will turn out to be. In the same way, Mill’s
“pleasure” is a mere token for whatever is desirable, valuable, worthwhile, constitutive of happiness – whatever that turns out to be. 

So Mill's view is that happiness is much closer to an "activity of the soul" than a state of pleasurable sensation.

For a detailed article on the meaning of happiness to Mill, click here.