NACM credit manager's index: report for December 2007.(TRADELINE)

The seasonally adjusted Credit Manager's Index (CMI) fell for the fourth consecutive month in December. The index lost 0.7%, and dropped to a record low of 52.4%. Six of the 10 components fell, including a 4% drop in dollar collections. Daniel North, chief economist with credit insurer Euler Hermes ACI, said, "While the manufacturing index actually gained 0.8%, it was overshadowed by a loss of 2.3% in the service index. The deterioration in the combined index matches that of other major indicators in the macroeconomy, including disappointing holiday sales, a weakening employment market, accelerating declines in housing prices, downgrades of banks and insurers, plummeting consumer confidence and a rapid increase in delinquencies and defaults on many types of credit. It would appear that trade credit managers are now encountering the same difficulty found in other credit markets, that is, the inability of debtors to pay bills due to insufficient cash flow."

For the first time in four months, the manufacturing sector actually gained ground, rising 0.8% to 53.5%. "Most of the increase came from significant improvements in disputes and the dollar amount of customer deductions" North said. "The data suggest that at least for the month of December, manufacturers' customers are being less aggressive about holding on to their cash," he concluded.

The service sector index fell 2.3% in December on a seasonally adjusted basis, led by sharp downturns ...