NACM Credit Manager’s Index for March 2008

or the first time since the seasonally adjusted Credit Manager’s Index (CMI) was calculated in February
2002, the combined index has fallen below the crucial 50 level, indicating an economic contraction. It was the
sixth decline in seven months, and a record six of 10 components fell. The service sector fell below 50 for the
second consecutive month, while the manufacturing sector tied a record low of 51.0. “It was an unhappy report,” said Daniel North, chief economist for credit insurer Euler Hermes ACI.

“The information in the report confirms other national data, such as negative growth in non-farm payrolls,
record home foreclosures and real retail sales falling year over year, which indicate that the economy is
almost certainly in recession,” North said. While the Federal Reserve Bank has reacted quickly to soothe the
turbulent financial markets, it takes up to a year for Fed interest rate cuts to have their full effect. “When that
happens, and when the housing market finally regains its footing, then the economy will begin to recover,
perhaps by the end of 2008 or the beginning of 2009,” he concluded.

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