Business activity in the U.S. Midwest expanded more than expected in November, reaching its highest level in over a year as new orders jumped, a report showed on Monday.

The Institute for Supply Management-Chicago business barometer rose to 56.1 from 54.2 in October, the strongest since August 2008.

It shows manufacturing activity is holding up after a recovery in the third quarter, and it looks like the bounce we got in the auto sector probably is helping other areas too, said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St Louis, Missouri.

Economists had forecast the index at 53.7. A reading above 50 indicates expansion in the regional economy.

The breakdown was generally on the encouraging side, said Alan Ruskin, chief international strategist at RBS Global Banking and Markets in Greenwich, Connecticut. The one area in the Chicago data that remains notably worse than the national averages is the employment index.

New orders jumped to 62.8 from 61.4, the highest point since May 2007, even as production sagged to 57.6 from 63.9 last month.

The barometer's employment index rose to 41.9 from 38.3 in October, the highest since September 2008. Prices paid rose to 52.6 from 48.6.

The ISM-Chicago index is often regarded as a factory index because the region is relatively industrialized. But service-sector and nonprofit forms are polled as well.

The latest uptick will tend to underpin expectations that the ISM manufacturing numbers will remain reasonably buoyant, Ruskin said. The national ISM factory report is due on Tuesday.

Separately, ISM-Milwaukee reported its monthly purchasing managers' index at 57 in November versus 50 in October.

(Editing by Kenneth Barry)

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