WASHINGTON—U.S. services industry activity picked up in March, boosted by the rollback of pandemic restrictions, but higher prices for fuel and other commodities because of Russia’s war against Ukraine are creating uncertainty for many businesses. The Institute for Supply Management’s survey on Tuesday showed capacity constraints and inflation remained major challenges, though the labor crunch had eased. According to Anthony Nieves, chair of the ISM Services Business Survey Committee, the Russia-Ukraine war “has impacted material costs, most notably fuel and chemical prices.” “The services sector is entering the second quarter on strong footing, but two risks continue to cloud the near-term outlook,” said Bernard Yaros, an economist at Moody’s Analytics in West Chester, Pennsylvania. “The first is Russia’s invasion of Ukraine and the second risk remains COVID-19.” The ISM said its non-manufacturing activity index rebounded to a reading of 58.3 last month from a one-year low of 56.5 in February, …