US Services Slows, Iran War Fuels Inflation
Analysis based on 7 articles · First reported Apr 06, 2026 · Last updated Apr 06, 2026
The slowdown in the United States services sector growth and soaring inflation pressures, largely driven by the conflict involving Iran and Israel, are negatively impacting the markets. This situation is diminishing the likelihood of interest rate cuts by the United States — Federal Reserve this year, leading to uncertainty and higher costs for businesses.
The United States services sector experienced a slowdown in growth during March, with the Institute for Supply Management's nonmanufacturing purchasing managers' index falling to 54.0. This deceleration, coupled with a significant increase in prices paid by businesses for inputs (reaching a 13-year high), is attributed to the prolonged conflict involving Iran, the United States, and Israel. The war has boosted global oil prices by over 50% and led to threats to close the Strait of Hormuz, impacting logistics and supply chains. This inflationary pressure is complicating the United States — Federal Reserve's monetary policy, making interest rate cuts less likely this year. Additionally, services sector employment contracted, though this is at odds with broader government job growth data. Former President Donald Trump's tariffs also continue to contribute to business uncertainty and rising costs.
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