NACM Credit Manager’s Index for January 2008

The seasonally adjusted Credit Manager’s Index (CMI) fell for the fifth consecutive month in January, slipping 1.0 point to a record low of 51.4. The previous record had been set last month at 52.4. “Five of the index’s 10 components fell, and both the manufacturing and service indexes declined, indicating that the weakness was widespread although not terribly deep,” said Daniel North, chief economist with credit insurer Euler Hermes ACI. “The CMI’s steady decline has mirrored other macroeconomic data which suggests a sharp slowdown. For instance, fourth quarter GDP grew at an annualized rate of only 0.6%, well under expectations of 1.1% and the long-term average of 3.5%. The GDP report showed the economy as perilously close to the beginning of a recession.”

“Signs of the downturn are everywhere: terrible holiday sales, massive job losses in housing and in financial services, downtrends in volatile global financial markets, downgrades of bond insurers and many debt instruments, the Fed overreacting with cuts of 1.25% in eight days and an emergency stimulus plan in the works,” North said. “Clearly, these unpleasant trends in the macroeconomy are now well reflected in credit managers’ experience.”

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