The economy again contracted by less than originally thought last month. The final composite output index stood at 48.5, up from its 46.8 flash estimate and now just a tick short of August's final 48.6. That said, it was still below the 50-expansion threshold and indicative of the steepest fall in business activity since January.

The headline revision reflected stronger services where the 47.2 flash sector PMI was amended to 49.3, just 0.2 points short of its final August mark and close enough to 50 to signal stagnation. Even so, new business continued to decline marginally as demand softened at home and abroad and backlogs decreased for a fourth straight month. Headcount also fell for the first time in just over two-and-a-half years and at the fastest rate since the start of 2021. That said, business expectations for the year ahead remained optimistic overall, edging up to a 3-month high in September.

Today's update still suggests that the UK economy had a subdued third quarter. Following earlier positive revisions to GDP growth over the first half of the year, economic activity seems to be holding up better than expected. Indeed, at 24 and 19 respectively, the RPI and RPI-P confirm this. However, with services still facing inflation pressures, the four hawks who voted to raise Bank Rate in September are unlikely to be swayed.

No revisions are expected leaving the headline composite output index at 46.8, down from August's final 48.6.

The Services Purchasing Managers' Index (PMI) provides an estimate of service sector business activity for the preceding month by using information obtained from a representative sector survey incorporating transport and communication, financial intermediation, business services, personal services, computing and IT and hotels and restaurants. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are compiled by the Chartered Institute of Purchasing and Supply (CIPS) and S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM non-manufacturing index in the U.S. and the S&P Global PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The S&P Global PMI services data give a detailed look at the services sector, how busy it is and where things are headed. The indexes are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.