NACM Credit Managers Index February 2007


The seasonally adjusted Credit Manager’s Index (CMI) crept 0.6% lower in February. It was the sixth decline in seven months, and five of the Index’s 10 components fell. Much of the fall was driven by sharp decreases in the new credit applications component of all three indexes. “Indeed, without the slide in new credit applications, the combined index would have risen 0.3%. The data suggests that businesses are curtailing their spending in anticipation of an economic slowdown, a notion confirmed by January’s durable goods orders report, which showed that business orders for items meant to last more than a year dropped sharply last month,” said Dan North, Chief Economist with credit insurer Euler Hermes ACI. He noted that the combined sectors’ results reflect conditions found throughout the economy: continued economic momentum accompanied by stubborn signs of deterioration; the Institute of Supply Management’s (ISM) manufacturing index fell below 50 for the second time in three months; median housing prices have fallen for six consecutive months (an unprecedented event); and the U.S. Treasury yield curve has become increasingly negative, a strong indicator of a future slowdown.

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