NACM Credit Manager's Index: report for August 2007.(Report)

The seasonally adjusted Credit Manager's Index (CMI) crept up 0.2% in August even though six of 10 components fell. The manufacturing sector rose 0.4 points, but the service sector slipped 0.1. "The data in the survey doesn't provide a compelling picture of current business conditions, which is backed by comments from the survey respondents," commented Dan North, chief economist with credit insurer Euler Hermes ACI.

"Some trade credit managers seem to be experiencing the same difficulties currently seen in virtually all credit markets," North said. He noted that the rapid rise in delinquencies and defaults in the subprime mortgage market have sent a contagion of fear into other mortgage-backed securities, corporate bonds, leveraged buy-out financings and now even the safest of commercial paper markets. "If the highest quality credits are having difficulty securing financing, then smaller businesses will be even more strapped to find financing of any kind, including financing of trade credit as suggested by the respondents to this survey," he said. "Conditions in the credit markets are likely to force the Fed's hand at the September meeting when a new cycle of monetary easing is likely to begin."

"The manufacturing sector rose 0.4 points (0.7%) in August, but a declining housing market combined with poor weather in parts of the country weighed heavily on the construction industry," North said. "Bankruptcies in other industries such as the auto sector continue ...