NACM Credit Manager’s Index November 2008

“The seasonally adjusted Credit Manager’s Index (CMI) for November painted an even uglier portrait of the
economy than it did last month, dropping 2.6 to a record low of 42.2, well below the 50 level indicating
economic contraction,” reported Daniel North, chief economist with credit insurer Euler Hermes ACI, who
evaluates the data and prepares the report for the National Association of Credit Management. “The amount of negative data was overwhelming, as eight of the 10 components fell and seven set record lows, leaving all 10 components below 50,” he said. On a year-over-year basis, four components and the total index itself fell record amounts. Both the manufacturing and service sectors set record lows.

“The macroeconomic data continues to describe an economy which is in bad shape and which seems to be deteriorating,” said North. Unemployment is on the rise as hundreds of thousands of jobs are being lost every month, retail sales are falling dramatically, especially on an inflation-adjusted basis, third quarter GDP growth was negative and credit is still very difficult to get. “It’s little wonder that credit managers are seeing so much demand for trade credit, but at the same time they are facing a very difficult business environment where their sales are deteriorating on the front end, and their customers can’t re-pay them at the back end,” said North. “Unfortunately, the holiday shopping season is here, and the results are likely to be grim. It will be great news if they are only as bad as they are expected to be."

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