The seasonally adjusted Credit Manager’s Index (CMI) rose 1.6% in April, recouping last month’s losses as eight of the 10 components of the Index rose. The increase was driven by gains in the sales component and in both collections components.
“While overall the report was positive, there was a disparity between the manufacturing sector, which rose 3.3%, and the service sector, which was unchanged,” stated Dan North, chief economist with credit insurer Euler Hermes ACI. He noted that comments from the respondents echo a familiar refrain that the demise of the housing market has been a major drag on distributors of goods into that industry. “Median prices on existing homes have now fallen for eight consecutive months on a year-over-year basis,” he noted. “This is an unprecedented event since house prices almost never fall, and they have never fallen for more than two months in a row in the 38 years that records have been kept.” The continued deflation of the housing market bubble as seen in this data, combined with the lagged effects of monetary policy tightening and the prospect of higher gasoline prices, suggest that the economy will continue to slow throughout the year.