Financial issues in Greece affect credit index

Concerns in the European financial sector over what is being termed the "Greek disease" are starting to affect domestic economic indicators, according to the May Credit Managers' Index.

The impact of Greece's shaky economy has been felt in European financial markets, according to a news release from the National Association of Credit Management, but declines in the latest CMI numbers indicate the impact has stretched beyond the continent.

The May CMI dropped to 55.9, the first drop in more than a year. The drop was felt in favorable factors, such as sales and dollar collections, and unfavorable factors such as rejections of credit applications and dollar amount of customer deductions.

The concern, according to NACM Economic Adviser Chris Kuehl, is that the CMI tends to be a precursor for the rest of the economy; the index began to drop in 2008, for example, three months before the rest of the economy started to feel the effects of the banking crisis.

"The sense among observers has been that the Greek crisis and its implications would soon have the same kind of impact on the credit environment that the sub-prime crisis had in 2008," Kuehl said in the release. "Last month’s data seems to bear this out.”[[In-content Ad]]