US October services PMI revised lower to 56.1 from 57.9 preliminary

• The preliminary reading was 57.9
• The previous reading was 58.8
• The composite PMI came in at 55.9, compared with a preliminary 57.6
• The composite's prior reading was 58.4
• Future activity sentiment dropped to its weakest level since May
• Demand was described as high
• On balance, sentiment was the weakest since May

That adds downside risk to the ISM services report due at the top of the hour.

My concern is that the Fed is lagging on inflation and that it is spreading. Trump could, of course, help turn that around if he can exit the Iran war as soon as possible.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said:

“The October PMI surveys mark a strong start to the fourth quarter for the US economy, indicative of GDP rising at an annualised rate of over 4%. The star of the upturn remains the tech sector, but encouragingly solid supporting performances are also being seen in consumer-facing sectors and financial services

“However, the good news on growth is tainted by yet another worrying intensification of inflationary pressures and some disappointing forward-looking indicators from the survey.

“Although current output growth remains strong, the pace of expansion has slowed from recent highs, linked to slower gains in order book inflows and reduced confidence about the economic outlook.

“Business optimism fell sharply across the vast services sector in October, reflecting worries relating to affordability, interest rates, and the uncertain political environment.

“Average prices charged for services meanwhile rose at one of the fastest rates seen over the past four years. Combined with a jump in goods prices tracked by the October manufacturing PMI survey, the overall signal is for inflation to rise further above the Fed’s target in the coming months.”