“The seasonally adjusted Credit Manager’s Index (CMI) for October revealed an increasing sense of doom among the participants, mirroring conditions in the rest of the economy,” said Daniel North, chief economist for credit insurer Euler Hermes ACI, who analyzes the data and prepares the CMI report for the National Association of Credit Management. The combined index fell 2.6% to a record low of 44.8%. Eight of the 10 components fell, nine are now below the 50 level, indicating economic contraction, and eight set record lows.
“The misery was spread all around but manufacturing fared the worst, losing 4.2%, while services fell 0.9%,” said North. Both manufacturing and services were below 50% for the second consecutive month. “The‘accounts placed for collection’ component was below 40% in both manufacturing and service sectors,suggesting that customers are trying their best to drag out terms in an effort to get credit in any form they can,because apparently banks aren’t giving any,” said North.
“Certainly the economy is in dismal shape after the effects of high energy prices and the housing market bubble burst have been dragging on for some time. Now the increasing number of job losses, shrinking GDP, negative real retail sales and a host of other indicators confirm that the recession has arrived. Perhaps most troubling though is the disruption in the financial markets which has severely curtailed the availability of credit. As a result, which credit managers are so clearly telling us, not only is the economy bad, but the credit situation is making it even worse,” said North.