The US S&P Global Services PMI for March fell to 49.8, marking the first contraction in the sector since January 2023 and the lowest reading in over three years, according to S&P Global [1]. This decline from 51.7 in February signals a sharp slowdown in business activity, attributed to higher inflation and the ongoing war in the Middle East [1]. Rising input prices, particularly due to surging energy costs, have contributed to above-trend input cost inflation, with prices rising to the greatest degree so far in 2026 [1].
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated that the service sector's contraction has dragged the overall US economy down to a near-stalled 0.5% annualized rate of growth in March [1]. He highlighted that consumer-facing service sectors were worst hit, with the March downturn among the steepest recorded since data began in 2009, excluding pandemic lockdowns [1]. Williamson attributed the deteriorating growth trend to a pull-back in spending amid worsening affordability, as costs and selling prices surged higher in March [1].
Despite the negative PMI data, the US Dollar (USD) remained steady after a modest rise following the Nonfarm Payrolls report, with the US Dollar Index (DXY) trading with modest gains above 100.00 [1]. The USD was the strongest against the New Zealand Dollar, gaining 0.33%, and also posted gains against other major currencies such as the Canadian Dollar (+0.18%), Euro (+0.10%), and British Pound (+0.09%) [1].
No forward-looking statements or analyst opinions regarding future PMI trends or broader economic outlook were provided beyond Williamson's comments on current conditions [1].
CONCLUSION
The contraction in the US S&P Global Services PMI signals mounting pressures from inflation and energy costs, leading to a sharp slowdown in the services sector and overall economic growth. Despite these concerns, the US Dollar showed resilience, posting modest gains against major currencies. Market participants may remain cautious as affordability issues and rising costs continue to weigh on economic activity.