The US service sector contracts for the first time in three years

Deep Tide TechFlow message. On April 3, according to data from Jin Ten, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said that PMI survey data show the U.S. economy is facing pressure from rising prices and heightened uncertainty. The Middle East war has further intensified concerns about other policy decisions in the near term. The services sector fell into contraction for the first time since January 2023, dragging the overall economy to a near-stagnation level, with the seasonally adjusted annualized growth rate at only 0.5% in March. The most severely affected area is consumer-facing services; aside from the period of pandemic lockdowns, March’s decline was one of the largest since related data began in 2009. Financial services and technology industries, which had performed strongly last year, are showing signs of weakening amid concerns about volatility in financial markets and rising interest rates. The key reason behind the deterioration in economic growth is a decline in spending, caused by falling purchasing power, while in March energy prices surged, driving a sharp rise in costs and selling prices. Survey data show that companies’ willingness to pass costs on to customers over the next few months is increasing, and consumer price inflation could accelerate to nearly 4%.