By Xavier Fontdegloria

Business activity in the U.S. accelerated in November to a more than five-year high despite the surge in coronavirus infections and tightening restrictions, preliminary data from IHS Markit showed Monday.

The flash reading for the U.S. Composite Output Index was 57.9 in November, up from the 56.3 registered in October. The reading signals that growth momentum picked up further at the fastest rate since March 2015, IHS Markit said.

The indicator is based on data from the firm's PMI surveys for manufacturing and services sectors. An index reading above 50 indicates expansion, while below 50 it signals contraction.

In November, both manufacturing and services sectors remained in expansion territory and indicated a steeper upturn in output, data showed.

"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," said Chris Williamson, chief business economist at IHS Markit.

IHS Markit's flash U.S. Services Business Activity Index was 57.7 in November, up from 56.9 in September. Economists polled by Dow Jones expected the indicator to come in at 55.0.

Contributing to the steep rise in business activity was a faster increase in new orders at service providers, and one that was the quickest since September 2018.

Firms also registered a sharp increase in employment during the month. The boost to service sector workforces was the most marked since data collection began in October 2009, as rising demand spurred on hiring, IHS Markit said.

As for the manufacturing sector, IHS Markit PMI stood at 56.7 in November, up from October's 53.4 level. Economists expected the U.S. Manufacturing PMI flash reading to slightly slip to 53.0. This is the strongest improvement in operating conditions since September 2014.

Manufacturers registered a marked expansion in output, largely driven by a notable uptick in new business as demand conditions improved. Moreover, the rise in production was the fastest since March 2015, with some firms noting a greater ability to complete orders as they were received, the report said.

Improved hopes of a vaccine against Covid-19 and an end to election uncertainty, led to the greatest degree of optimism for the year ahead since May 2014.

"Expectations about the year ahead have surged to the most optimistic for over six years, reflecting 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," Mr. Williamson said.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

November 23, 2020 10:18 ET (15:18 GMT)