Credit Manager’s Index hits record low

The CMI survey asks credit managers nationwide to rate favorable and unfavorable factors in their monthly business cycles.

The index mirrors other macroeconomic data that suggests a sharp slowdown, according to the report. Fourth-quarter gross domestic product grew at an annualized rate of 0.6 percent, below expectations of 1.1 percent and the long-term average of 3.5 percent.

“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 percent in eight days and an emergency stimulus plan in the works,” said Daniel North, chief economist with credit insurer Euler Hermes ACI, in the report. “Clearly, these unpleasant trends in the macroeconomy are now well reflected in credit managers’ experience.”

The manufacturing sector index fell for the fourth time in five months, dropping 1.8 points to 51.7, the second lowest in the index’s history. Survey respondents blamed the decline on conditions in residential construction and their effect on commercial construction.

The service index fell for the fourth consecutive month to 51.1, with much of the respondents’ commentary on the housing market and an increase in bankruptcies.[[In-content Ad]]