Global Business Slows Amid Iran War

Global business activity significantly slowed in March across the U.S., Europe, and parts of Asia, fueled by surging energy prices and heightened uncertainty stemming from the ongoing Middle East conflict. This downturn is evident in an 11-month low U.S. PMI, delayed ECB interest rate cuts, and companies building "safety stocks" amid disrupted global supplies and rising inflation expectations.

Global business activity significantly slowed in March across the U.S., Europe, and parts of Asia, as reported by Morningstar.
The U.S. composite Purchasing Managers' Index (PMI) dropped to an 11-month low of 51.4 in March, signaling slower growth and rising inflation, according to S&P Global.
Rising energy prices, particularly Brent crude surging past $80-82 per barrel by early March, are a primary cause of the downturn, with Reuters noting the conflict's impact on global energy supplies.
Heightened uncertainty from the ongoing Middle East conflict is contributing to increased inflation expectations and a reduction in new orders. The European Central Bank (ECB) postponed interest rate reductions and raised its 2026 inflation forecast due to the war's "material impact".
The conflict's fallout, including the effective closure of the Strait of Hormuz, has led to a massive decline in shipping traffic and disrupted global oil and gas supplies, as highlighted by the House of Commons Library.
This downturn signals potential long-term economic repercussions, with companies building "safety stocks" and trimming headcounts amid concerns of protracted supply issues and price rises.