Businesses, private jobs decline

Economies across the world, especially those in the Middle East, Asia, and Europe, take a beating due to the US-Israel-Iran war, which is on for nearly three weeks. Now, there is bad news from the extreme west, America. The US, which was supposedly the most resilient economy that was able to withstand the Gulf shocks, is for a rude sock, a sucker-punch in the face. The latest survey-based findings show that business activity in America is down to an 11-month low in March 2026. It seems that the entire global economy is in for a spin.

“The flash PMI (Purchasing Managers’ Index) survey data… signal… slower growth… following the outbreak of war in the Middle East. Companies are reporting a hit to demand from the additional uncertainty, and cost-of-living impact generated by the conflict,” warned Chris Williamson, chief business economist, S&P Global Market Intelligence, which conducts the regular surveys across the world. The US Composite PMI Output Index, which tracks manufacturing and services, was down at 51.4 in March, lower than 51.9 in February, and the lowest level since April 2025. It declined for the second consecutive month, though a PMI above 50 is healthy for the private sector.

However, unlike India, where the PMI index for March 2026 is down largely due to the expectations in manufacturing, the opposite was true in the US. In the latter case, the flash PMI for services declined from 51.7 in February to 51.1 in March, even as manufacturing improved from 51.6 to 52.4 during the same period. This has confounded experts, who expected the PMI for manufacturing to dip to 51.3, which would have further pulled down the overall monthly index. Several reasons can account for the manufacturing turnaround. Demand remains firm, and prices have not moved up much due to lower tariffs.

However, the inflationary pressures have begun to bite, and red signals are flashing all over. Williamson called it an “unwelcome combination of slower growth and rising inflation.” The index that measures input prices paid by businesses was up from 60 in February to 63.2 in March, and both services and manufacturing units reported rises that were “widely linked to the war-related spike in energy costs, and tightening supply conditions.” Global crude oil prices have surged by 50 per cent and more in the past 25 days. In the US, the average national gasoline prices were up by nearly $1 per gallon creating a multiplier effect.

More bad news came on the job front. For the first time in over a year, there was a decline in private-sector employment, as indicated by the PMI survey. There was a deterioration in sentiments. According to a media report, “The findings at face value would suggest persistent labour market weakness, though timely data like weekly claims for unemployment benefits have remained consistent with stable conditions.” The survey’s measure for jobs dropped from 50.4 in February to 49.7 in March, the “first contraction in 13 months.” Services sector was the main culprit, possibly because firms reduced “overheads in the uncertain economic climate” due to the war.

As experts and analysts wait for inflation to raise its ugly head, coupled with economic slowdown and job uncertainty, there will be other repercussions. Last week, the Federal Board left interest rates unchanged, but projected higher inflation and steady unemployment, and indicated a possible single reduction in interest rates this year. “The Fed will therefore need to juggle these intensifying upside risks… against the growing risk of the economy losing growth momentum, with much depending on the duration of the war, and its impact on energy prices, and global supply chains,” explained Williamson.

A day after the S&P survey, or the next morning in America, the news headlines were blunt and disruptive. The Iranian military dismissed Donald Trump’s claims of peace negotiations, and mocked the US of possibly “negotiating with itself.” The US was expected to deploy 1,000 paratroopers to the Middle East, even as Iran attacked locations in Israel and Gulf nations. Yet, there was a positive when Iran maintained that “non-hostile vessels” could pass through the crucial Strait of Hormuz. Reports indicate that some ships bound for China, India, and Pakistan have passed through the narrow, but “vial waterway.”

Until February 2026, the US dollar held supreme among global currencies, and strengthened against most of them, especially the Asian ones. However, according to reports, although the dollar edged slightly lower in the month (March 2026), "a high-risk premium for the US dollar exposure persisted.” While the Japanese yen weakened, as did the Indian rupee, the Chinese yuan and Hong Kong dollar remained stable. One can say that the upward surge of the US dollar has stemmed a bit, even as the currency enjoys a safe-haven demand.

There are reports that the US has prepared a 15-point peace plan, and the officials were more confident of Iran’s willingness to end the war. Iran, as mentioned earlier, denied these reports, and indicated that America is possibly more interested to end the war due to economic tensions. “Lower oil prices resulting from the latest developments are negative for the dollar (even if the peace statements are contradicted by fresh Iranian attacks) as the US is a net oil exporter. It also reduces the prospect of the Federal Reserve towards rate rise,” states a report.

Some analysts contend that the Iran conflict “disrupted soft landing hopes, with… warning of 1970s-style stagflation if the conflict persists beyond 30 days.” If the war lasts, the projections are that the global economies will remain stressed for years, and global crude prices are likely to remain high until 2028. “Among the 21 economies that share the euro currency, private sector growth all but stalled this month as companies signalled an increase in delivery times, and expectations of rising costs that they in turn would be trying to pass on,” state some reports. In the US, businesses have passed costs to consumers.

Other G-7 economies fared little better than America or Europe. Business activity, according to S&P PMI indices, grew at the slowest pace in six months, as input costs accelerated. In Japan, it showed the slowest rise in three months. India, which is outside G-7, saw the private-sector growth hit a three-year low in March 2026, as inputs rose the fastest since June 2022, which were passed on to the consumers only partly that led to squeezed corporate margins. India was considered the engine for global growth for the past few years.