US Services Activity Unexpectedly Improves: S&P Global

The S&P Global US Services PMI rose to 51.3 in April of 2026 from 50.3 in the previous month, well above market expectations of 50, according to a preliminary estimate. The result reflected a quick recovery in private services activity following the initial impact of the war in Iran, which triggered surges in energy prices and halted key trading activity. New business placed for companies inched higher, but remained below the average pace from the previous two years as clients cited affordability issues. Meanwhile, input costs rose the most since December, but the sharp increase was enough for firms to hike selling prices the most in 45 months. Meanwhile, employment levels inched higher. Business outlook improved slightly from the previous month, but remained sharply lower than comparable levels from last year.

The S&P Global US Services PMI fell to 49.8 in March of 2026 from 51.7 in the previous month, revised lower from the preliminary estimate of 51.1, signaling the first contraction in the sector in over three years. The decline came amid the weakest growth in new business since April 2024, as firms cited reduced client confidence and softer demand, partly linked to the impact of the Middle East conflict. Export activity also deteriorated further, with tariffs and geopolitical tensions weighing on trade. Business sentiment weakened to a five-month low as rising energy costs raised concerns over inflation and consumer spending. Employment edged lower for the first time since December, reflecting caution among firms. Input cost inflation accelerated to its highest level this year, driven largely by higher energy prices, while companies continued to pass on rising costs to clients, pushing selling price inflation to an eight-month high.

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.