NACM Credit Manager’s Index Report for December 2008

The seasonally adjusted Credit Manager’s Index (CMI) fell 2.1 in December to a record low 40.1. It was the fourth consecutive record low. All 10 components are below the 50 level, representing economic contraction, and six of the components are at record lows. “The carnage was widespread as both the service and  manufacturing indexes fell to record lows, and all 20 of their collective components’ fell below 50,” said Daniel North, chief economist with credit insurer Euler Hermes ACI, who evaluates the data and prepares the CMI report for the National Association of Credit Management (NACM). “Credit managers delineated in nauseating detail the business conditions of an economy which has lost almost two million jobs in the last year, and one whose prospects are dismal,” North continued. “Deteriorating sales and payment patterns are the credit managers’ main complaints, and those complaints are likely to strain cash flow and put businesses at risk.”

“It’s no wonder things look so grim,” said North. “Retailers had abysmal holiday sales which are likely to
contribute to a wave of bankruptcies in 2009. Continuing difficulties in both the auto industry and the
financial markets are putting a severe drag on the economy. The housing market is still in decline.”
North surmises that it’s possible, however, that a change in administration, super loose monetary policy and a new stimulus package will help bring the U.S. out of the recession next year. “But according to credit managers, it’s going to be a rough ride until then,” he said.
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