US Services Growth Slows, Iran War Fuels Inflation
Analysis based on 7 articles · First reported Apr 06, 2026 · Last updated Apr 07, 2026
The U.S. services sector growth slowed in March, while inflation pressures increased significantly due to the Middle East conflict involving Iran, leading to higher oil prices. This situation has diminished the odds of an interest rate cut by the United States===Federal Reserve this year, creating uncertainty for financial markets.
The U.S. services sector experienced a slowdown in growth during March, with the nonmanufacturing purchasing managers' index slipping to 54.0. Concurrently, prices paid by businesses for inputs surged to a 13-year high, primarily driven by the prolonged conflict involving Iran. This Middle East conflict has boosted global Petroleum prices by over 50% and led to increased gasoline prices, contributing to inflation. Businesses across various industries, including construction, wholesale trade, and real estate, reported heightened uncertainty due to the war and threats to shipping through the Strait of Hormuz. The United States===Federal Reserve is expected to maintain interest rates unchanged for some time, as the inflation fallout from the conflict has reduced the likelihood of rate cuts. Despite the slowdown in services employment, overall job growth in March showed a rebound. Past tariffs imposed by Donald Trump also continue to add to business uncertainty.
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