The latest data from the Credit Managers’ Index projects less optimism than in recent months, but officials say the numbers aren't all doom and gloom. The index slipped nearly two points in March, to 64.1, down from 62.2 in February.
The index showed sharp declines in sales, dollar collections and new credit applications, and the amount of credit extended, according to a news release.
“This is not exactly catastrophic as the index remains in the 60s, but the pace has dramatically slowed and that is hardly what had been anticipated or hoped for,” Chris Kuehl, managing director of Armada Corporate Intelligence and economic adviser for the National Association of Credit Management, said in the release.
The March data suggests the U.S. economy is struggling to keep pace with world events that have affected a wide range of economic factors from commodity price expectations to sourcing decisions and credit allocation.
“It is important to note that the ripple effects of the events in the Middle East and Japan have only started to manifest and will be factors for months to come,” Kuehl said in the release. “The Japanese catastrophe has affected supply chains all over the U.S. and Europe, and that has added considerable expense to manufacturers being forced to find new suppliers or wait for weeks to get what they need from the affected region.”
According to the release, the price per barrel for oil has jumped by nearly $15 since December, and the effects of that are filtering into all economic sectors.
The most dramatic change in the index data was in dollar collections, and the combined index reverted 55.7 from 56.4, levels not seen since November 2010.
Kuel reiterated that with index numbers in the high 50s and low 60s, the index numbers themselves haven’t changed drastically. What is problematic, he said, is that expectations had been high, with anticipation that the numbers would be in the mid-60s level by now and headed into the 70s by mid-summer, which is no longer a likely scenario.
Other findings from March index data: • Radical price hikes for industrial metals and food inflation are as bad as they have been since 2008. • Companies reporting on creditors suggest that payment slowdowns have been the result of a spike in operating costs. • There were fewer bankruptcies for the March index period.
“The anecdotal evidence suggests that most creditors are reacting to some short-term shocks but expect to be back to normal in the months to come – providing that the situation in the Middle East does not worsen appreciably,” Kuehl said in the release.[[In-content Ad]]
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