Short answer:

No, npm update does NOT change the version numbers in the package.json file to updated version numbers.

Long answer:

1. Running npm updatedoes not update the version numbers in the package.json file.
2. However it does change the version numbers in the "node_modules/packagename" field of the respective packages listed in the "packages" key and the dependecies in the "dependencies" keys in the package-lock.jsonfile.