NACM credit manager's index: report for January 2008.(CMI)(National Association of Credit Management)

The seasonally adjusted Credit Manager's Index (CMI) fell for the fifth consecutive month in January, slipping 1.0 point to a record low of 51.4. The previous record had been set last month at 52.4. "Five of the index's 10 components fell, and both the manufacturing and service indexes declined, indicating that the weakness was widespread although not terribly deep," said Daniel North, chief economist with credit insurer Euler Hermes ACI. "The CMI's steady decline has mirrored other macroeconomic data which suggests a sharp slowdown. For instance, fourth quarter GDP grew at an annualized rate of only 0.6%, well under expectations of 1.1% and the long-term average of 3.5%. The GDP report showed the economy as perilously close to the beginning of a recession."

"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% in eight days and an emergency stimulus plan in the works," North said. "Clearly, these unpleasant trends in the macroeconomy are now well reflected in credit managers' experience."

The seasonally adjusted manufacturing sector index fell for the fourth time in five months, dropping 1.8 points to 51.7, the second lowest level in the index's history. Six of the 10 components fell, including a sharp decline in the sales component of 8.9 points. "A decline in the sales component of this magnitude is often a harbinger of decay in the overall manufacturing index in the coming months;' North said. "It's no surprise that the housing market is the biggest culprit." North also explained how one survey respondent noted that their increased past dues were coming from one of the largest national chains of building supplies. Another noted that terrible business ...