U.S. business activity powered ahead in November at the fastest pace since March 2015, with stronger growth at service providers and manufacturers highlighting broad momentum in an economy challenged by the coronavirus resurgence.
The IHS Markit flash composite index of purchasing managers at manufacturers and service providers increased to 57.9 from 56.3, the company reported Monday. Readings above 50 indicate growth and the figure stands in stark contrast to the euro area, where activity shrank as governments tightened restrictions to contain a surge in infections.
While the IHS Markit U.S. measure is also at risk of moderating as covid-19 cases accelerate, recent positive developments around a vaccine helped generate the most optimism about future conditions since May 2014. Robust domestic sales and orders translated into additional hiring.
"The upturn reflected a further strengthening of demand, which in turn encouraged firms to take on staff at a rate not previously seen since the survey began in 2009," Chris Williamson, chief business economist at IHS Markit, said in a statement. Improved expectations reflect "the combination of a post-election lift to confidence and encouraging news that vaccines may allow a return to more normal business conditions in the not too distant future."
IHS Markit's flash services purchasing managers index rose to the highest level since March 2015, compared with estimates for a slight decline in the gauge. By comparison, the euro area's measure of service activity contracted for a third month to the lowest level since May.
While the IHS Markit figures showed marked improvement in its gauge of employment at service providers, other labor-market data have been mixed. Initial jobless claims unexpectedly rose during the week ended Nov. 14, and economists at JPMorgan Chase & Co. said a variety of alternative data points to a decline in November payrolls, which would be the first drop since April.
The Census Bureau's Household Pulse Surveys from mid-October to early November, coinciding with the pickup in infection rates, showed the number of employed fell by about 4.5 million.
At the same time, the Federal Reserve Bank of Philadelphia's latest business outlook survey showed its factory employment index for the region climbed in November to the highest level since July 2019.
IHS Markit's U.S. manufacturing index registered its strongest reading since September 2014. While not as robust, factory activity in the euro area expanded for a fifth month.