By Xavier Fontdegloria 
 

Activity in the U.S. services sector gained momentum in November, driven by upturns in output and new business despite the surge in Covid-19 infections across the country, data from IHS Markit showed Thursday.

The final reading for the U.S. Services Purchasing Managers' Index for November was 58.4, up from the 56.9 reading in October and above the earlier released flash estimate of 57.7.

Economists polled by The Wall Street Journal expected the final services PMI to come in at 57.5, slightly down from its preliminary reading.

The indicator confirmed the fourth consecutive monthly expansion in service sector business in November and at a rate of growth that accelerated compared to that of the previous months, IHS Markit said.

The U.S. Services PMI is a survey-based measure of activity in industries such as communications, finances or consumer services. A level above 50 indicates expansion, while a reading below 50 signals contraction.

"November saw US business activity surge higher at a rate not seen since early 2015 as companies enjoyed sharply rising demand for goods and services," said Chris Williamson, chief business economist at IHS Markit.

Contributing to the marked upturn in output was an accelerated rise in new business at service providers, with a rate of growth that was the fastest since April 2018. Output rose at the quickest pace since March 2015, the report said.

In line with greater client demand, firms increased their workforce numbers to a greater extent in November. "The recent improvement in demand and the brightening outlook encouraged firms to take on extra staff at a rate not previously seen since the survey began in 2009, underscoring how increased optimism is fuelling investment and expansion," Mr. Williamson said.

Business expectations strengthened in November, as service providers were boosted by a faster expansion in new business and hopes of a vaccine. The degree of confidence was the highest since January 2014 and well above the long-run series average, IHS Markit said.

Confidence has picked up considerably, with encouraging news on vaccines coinciding with reduced political uncertainty following the presidential election, hopes of greater stimulus spending and fresh stock market highs, Mr. Williamson said.

IHS Markit said the Composite PMI Index was 58.6 in November, up from 56.3 in October, as manufacturing and service sector firms both recorded faster expansions in output. The rate of growth was the sharpest since March 2015.

 

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

 

(END) Dow Jones Newswires

December 03, 2020 10:13 ET (15:13 GMT)

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