Global Economy Briefing — March 5, 2026

Economic Dashboard

Wednesday, March 4, 2026 — Key Releases

Europe

Services hold firm as PPI surges and Italian labour outperforms

The Eurozone services sector held its ground with the February composite PMI confirmed at 51.9 — in line with flash estimates and a slight beat on consensus of 51.8. Notably, Germany continued its services-led turnaround with the final services reading at 53.5 and composite at 53.2, both a tick above the 53.1/53.4 flash estimates. France, however, remained the weak link: both its services (49.6) and composite (49.9) readings stayed below the expansion threshold, underscoring the divergence between Europe’s two largest economies.

Moreover, the Eurozone PPI for January delivered a significant upside shock, rising 0.7% MoM versus a 0.2% consensus and reversing the prior month’s −0.3% decline. On a year-over-year basis the headline remained in deflationary territory at −2.1%, but the monthly acceleration will keep the ECB‘s inflation committee alert — particularly given the Iran oil shock hitting Europe in real-time. Vice President de Guindos spoke Wednesday, offering cautious guidance on the rate path amid energy uncertainty.

Italy provided two genuine bright spots. First, Q4 GDP was confirmed at +0.3% QoQ and +0.8% YoY — meeting estimates but accelerating from Q3’s +0.2% pace. Second, and more surprisingly, Italian unemployment dropped to 5.1% in January versus a 5.6% consensus and a 5.5% prior reading, a meaningful positive surprise that suggests the Italian labour market is tightening faster than models predicted.

Spain, meanwhile, saw its services PMI slip to 51.9 from 53.5, missing the 52.9 estimate. Accordingly, some of the enthusiasm from Spain’s recent growth momentum faded slightly — though the reading still reflects expansion. The ECB’s Bundesbank representative Balz also spoke on Wednesday, with markets attentive to any signals on whether the oil shock changes the timing of the next potential rate move.

United States

ISM Services explodes higher; oil retreats as Bessent steps in

The ISM Services PMI for February surged to 56.1, the highest since mid-2022, crushing the 53.5 consensus by 2.6 points. Business Activity hit 59.9 and New Orders reached 58.6 — both confirming that consumer-facing demand is accelerating rather than stalling under geopolitical pressure. Critically, the Prices Paid sub-index came in at 63.0, actually below the 68.3 estimate, offering the Federal Reserve a sliver of comfort on the services-inflation front even as oil prices remain elevated.

ADP private payrolls added 63K jobs in February, beating the 50K consensus and sharply reversing the 11K near-stall in January. The figure lifts confidence ahead of Friday’s official nonfarm payrolls print. S&P Global‘s final Services PMI, however, was the session’s soft note: it printed 51.7, below both the 52.3 estimate and January’s 52.7, suggesting that the ISM and S&P Global surveys may be telling somewhat different stories about the depth of services strength.

On housing, mortgage applications surged 11.0% for the week, a dramatic acceleration from the prior week’s 0.4%, as the 30-year mortgage rate held steady at 6.09%. The Refinance Index climbed to 1,637.5 from 1,432.9, and the Purchase Index rose to 158.9 from 149.7 — both pointing to a housing market that may be regaining traction as buyers who paused during the war-driven rate spike re-enter the market.

Treasury Secretary Bessent confirmed Wednesday that the 15% global tariff takes effect this week but added that he expects the levies to revert within five months — tempering market alarm. Oil inventories built by 3.475M barrels, broadly in line with the 3M estimate. WTI pulled back toward $74.56 from Tuesday’s $77.05 highs. The 10-year Treasury yield settled at 4.09% — its third consecutive session of gains — driven by Bessent’s tanker escort announcement and Iran’s reported back-channel signalling of ceasefire talks, which combined to halt but not reverse the bond sell-off.

Asia-Pacific

Japan confidence beats; India softens; Australia trade balance disappoints

Japan’s household confidence index beat expectations for February, rising to 40.0 from 37.9 against a consensus of 38.2. The print is a meaningful positive surprise suggesting that Japanese consumers are not yet rattled by the Iran-driven global uncertainty — a contrast to financial markets, which have seen South Korea’s Kospi plunge into circuit-breaker territory as its chipmaker-heavy index absorbs the war premium. Japanese bonds also showed some movement: the 30-year JGB auction cleared at 3.398%, down sharply from the prior 3.615%.

India’s composite PMI edged down to 58.9 in February from 58.4 previously, but missed the 59.3 consensus, suggesting a modest loss of momentum. Services slipped to 58.1 from 58.5, also below the 58.4 estimate. Critically, however, both readings remain well into expansion territory — India continues to be the global growth outlier among large economies. The slight deceleration is worth monitoring but does not alter the structural story of domestic demand-led strength.

Australia’s January trade balance came in at A$2.63B, missing the A$3.78B consensus and down sharply from December’s A$3.37B. Exports fell 0.9% MoM while imports rose 0.8%, compressing the surplus. The data is a near-term setback following Tuesday’s stellar GDP print (+0.8% QoQ, +2.6% YoY), but the underlying story has not changed: the RBA now faces a dilemma between celebrating growth and managing trade-side headwinds. A May rate hike remains live but less certain.

South Africa’s Standard Bank PMI held exactly at 50.0 — the neutral expansion threshold — for the second consecutive month. Foreign investment flows into Japanese stocks rose sharply to ¥973.9B from ¥399.7B, while Japanese foreign bond buying reversed to −¥673.1B. South Korea’s FX reserves grew marginally to $427.62B from $425.91B, and Brazil’s foreign exchange flows rose to $2.07B from $1.87B, pointing to continued EM capital inflows despite the geopolitical noise.

Latin America & Africa

Brazil services accelerate; South Africa stagnates at neutral

Brazil delivered a positive surprise in its February services PMI, rising to 53.1 from 51.3 — a month-on-month acceleration that lifted the composite to 51.3 from 49.9, tipping back into expansion territory. The improvement was broad-based across new business volumes and employment, offering a more constructive picture of Brazil’s service economy. Notably, Brazil’s PPI for January also rose 0.34% MoM, above the prior 0.14%, while foreign exchange flows held firm at $2.07B.

South Africa’s Standard Bank PMI held at exactly 50.0 for the second consecutive month — a reading that technically signals stagnation rather than contraction, but also no meaningful recovery. South African business activity remains caught between load-shedding improvements and elevated input costs driven in part by the oil surge. The rand is under additional pressure from global risk-off flows as Middle East tensions persist.

Furthermore, Canada’s labour productivity in Q4 fell 0.1% QoQ — matching the consensus but sharply down from +1.1% in Q3. The Bank of Canada’s Governor Macklem spoke during the session amid continued uncertainty about Canadian trade exposure to the new US tariff regime. Canadian services PMI remained in contraction at 46.5, better than the prior 45.8 but still firmly below 50.