NACM Credit Manager's Index: report for february 2008.(National Association of Credit Management)

The seasonally adjusted Credit Manager's Index (CMI) remained unchanged in February, breaking a streak of five consecutive declines. A rise of 1.5% in the manufacturing index was offset by a decline of 1.6% in the service index. However, the dollar collections component in manufacturing distorted the totals, soaring 10.2%, the second highest jump ever. "Without that component," said Daniel North, chief economist for Euler Hermes ACI, "manufacturing would have only risen 0.6%, and the combined index would have actually fallen into negative territory at -0.4%." Five of the components in the combined index are now below the 50 level, which would indicate economic expansion, tying the record set in November of last year. Six of the 10 combined components fell. "Perhaps most noteworthy," North added, "the service index has fallen below 50 for the first time."

"Overall, the combined index tells a story similar to the one we have been seeing for some time: a slow erosion of the combined index with more weakness in services than in manufacturing," said North. "The performance of the macroeconomy continues to be dismal, and it is quite likely that a recession has already started." The 49.5% reading in the service index clearly shows contraction and reflects the weakness of the overall economy. "In response, the Federal Reserve has slashed interest rates and will continue to do so in order to stimulate the credit markets and the macroeconomy," said North. "However, Fed actions take six to 12 months to become fully effective, so this aggressive rate cutting is simply too late to prevent a recession, although it will help get the economy out of a ...