The US service industry contracted for the first time in three years.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated that PMI survey data shows the US economy is under pressure from rising prices and increasing uncertainty, with the Middle East conflict further exacerbating concerns about recent policy decisions. The services sector contracted for the first time since January 2023, dragging the overall economy to nearly stagnant levels with an annualized growth rate of only 0.5% in March. The consumer-facing services industry was the most severely affected, with the decline in March being one of the largest since 2009, excluding the lockdown period. The previously strong performing finance and technology sectors showed signs of weakening due to market volatility and concerns about rising interest rates. The key driver of the economic slowdown is declining spending, as purchasing power decreases, while energy prices skyrocketed in March leading to significant increases in costs and selling prices. Survey data indicates that businesses are increasingly willing to pass on costs to customers in the coming months, and consumer price inflation may accelerate to near 4%.