- Prelim was 46.6
- Prior was 49.3
- Composite PMI 48.2 vs 47.3 prelim
- The fall in output quickened amid a renewed decrease in new orders and weaker client demand
- Composite rate of charge inflation eased to the slowest since December 2020.
- The outlook for service sector output over the coming year “was dampened by concerns regarding inflation and greater customer hesitancy. The degree of optimism remained below the series average and was the lowest since September 2020”
This is an unusually-larger upward revision to the final print and takes away some risk of a big surprise drop in the ISM reading in a few minutes. That said, the consensus on ISM is 55.5 from 56.7 so I still see risks to the downside.
The market may be overly-focused on lagging labor indicators while forward-looking data shows a real slowdown.
Siân Jones, Senior Economist at S&P Global Market Intelligence, said:
“Service sector firms faced a challenging start to the final quarter of 2022, as a renewed contraction in new business dragged output down further. Demand conditions were hampered by tighter financial conditions and elevated rates of inflation, leading to reports of postponements and the delayed placement of orders as customers assess their spending.
“Subdued demand and weaker confidence in the outlook for output led to a near-stagnation in employment. Reports of the non-replacement of voluntary leavers brought signs that firms were evaluating costs and future demand more closely before advertising vacancies and expanding staffing levels.
“Nonetheless, momentum in previously soaring inflation slowed again. Hikes in costs softened, as service providers and manufacturers saw slower upticks in supplier and input prices. Meanwhile, private sector firms sought to boost demand through a slower increase in selling prices. Although softening, further elevated rises in prices paid by consumers present obstacles to firms in an already challenging demand environment and paint a concerning picture as we head towards the end of the year.”