US Services Activity Unexpectedly Slows: S&P Global

The S&P Global US Services PMI fell to 51.1 in March of 2026 from 51.7 in the previous month, below the median market consensus of 51.1 to reflect the softest pace of expansion in the sector in eleven months, according to a preliminary reading. New work grew at a softer pace with both domestic and foreign orders decelerating. Firms cited subdued confidence for consumers and business customers as the war in the Middle East magnified existing policy-related worries of higher deficit spending. Lower margins for customers drove firms to reduce their staff. The outbreak of war and its impact on orders drove firms to have their weakest outlook since last October.

The S&P Global US Services PMI fell to 51.7 in February of 2026 from 52.7 in the previous month, revised lower from the preliminary estimate of 52.3 and well below the initial market estimates of 53 to reflect the softest pace of expansion in the US services sector in ten months. New work flows expanded at a softer pace, limited by a drop in export orders as foreign clients continued to struggle with uncertain trade policies from the retaliation on US tariffs. Still, firms registered a robust growth rate in their employment levels, largely due to ease in in filling existing vacancies, while cost-cutting efforts prevented a larger expansion in the workforce. Labor expenses had resulted in higher input inflation for service providers, driving an acceleration in output charges. Despite the softening signs, companies increased their optimism on future business due to tax breaks and stronger economic sentiment.

The S&P Global US Services PMI fell to 52.3 in February of 2026 from 52.7 in the previous month, missing expectations that it would increase to 53 to reflect the softest expansion in the US services activity in 10 months, according to a flash estimate. New work flows in the sector was sustained at a softer pace, pressured by a drop in export orders. The sluggish momentum in client demand drove firms to slow their marginal hiring rate. In the meantime, selling charges for services providers rose to a seven-month high to match their highest level in over three years, with input cost inflation remaining elevated but below recent peaks. Looking forward, companies remained optimistic that the end of a harsh winter and lower interest rates and tax breaks would support business activity in the upcoming year.