The S&P Global services PMIs for a swath of major economies declined in June, with the UK and Russia falling deeper into contraction territory and the UAE’s non-oil private sector recording its weakest expansion in more than five years. India’s services growth slowed to a 17-month low. The broad-based softening reflects the persistent drag from the Middle East conflict, which has disrupted supply chains, raised input costs and eroded business and consumer confidence across regions.

The Iran conflict has driven up transport and commodity costs, while geopolitical uncertainty has prompted clients to delay spending decisions. Viewed from London, political turmoil following the Prime Minister’s resignation added a further layer of risk aversion. Yet there were signs of supply chain recovery: in the UAE, delivery times improved at the fastest pace in four months as shipping bottlenecks in the Strait of Hormuz eased, and analysts in New Delhi noted that receding geopolitical disruption helped moderate input price inflation.

Employment data underscored the strain. The UAE saw its first drop in non-oil private sector staffing in over four years, with the sharpest job losses since August 2020. Russian services firms cut jobs for a fifth consecutive month, and UK services employment fell at the fastest rate since February. India, while still expanding, paused hiring as payrolls were deemed sufficient. Cost pressures remained elevated in most markets, though the pace of input price increases slowed in India and the UK, partly due to lower fuel prices. Businesses largely absorbed higher costs rather than passing them on, squeezing margins.

Looking ahead, analysts in Dubai note that recent moves towards easing geopolitical tensions could help demand recover, but client caution persists. In India, business confidence slipped to a five-month low amid competition and economic headwinds. The next factual milestone will be whether central banks in these economies interpret the softening activity and mixed price signals as justification for policy easing, or remain focused on lingering cost pressures.