Report for March 2009: NACM credit managers' index.

Combined Sectors

The seasonally adjusted Credit Managers' Index (CMI) rose another 0.5% in March after rising by 2.5% in February. This two-month increase broke a lengthy string of negative readings and matches up well with other data that has recently emerged--a slight reversal of the downward trend in manufacturing, a small boost in retail sales and a sharp spike in durable goods orders. A number of the components in the index are still below the 50 level, but they are starting to trend in a positive direction for the first time since July 2008.

Sales, dollar collections and amount of credit extended have started to rise, although all remain under 50. In terms of favorable factors, there were small reductions in categories like accounts placed for collection, disputes and dollar amounts of customer deductions, but on the negative side, the number of bankruptcies grew. All in all, the index of favorable factors showed the biggest improvement and pushed the overall CMI number to a level not seen since November of last year.

Considered together, recent data from the CMI and other economic benchmarks cautiously suggest that there may very well be a bottom in sight for this recession. "Getting back to an expansionary position will be not be simple and may take a few more months, but there are more and more signs that the recession may have reached its low point. The key issue from this point is how fast the rebound may be. Given that the most important issue in this recession has been access to credit, it is encouraging to note that the index is showing a pretty significant increase in credit extension, the best numbers since December 2008," commented NACM Economist Chris Kuehl, Ph.D. "As the survey is examined in coming months, there will be some categories that will merit close attention--the key will be the favorable factors as they will likely show progress of the recovery more quickly than the unfavorable factors. It is not uncommon for business to feel the most threat as the economy starts to come out of a recession bankruptcies often surge as stronger competitors begin to put pressure on weaker companies. But if new credit applications and the amount of credit extended show signs of progress, the economy will respond relatively quickly," said Kuehl.

Manufacturing Sector

The seasonally adjusted manufacturing index showed some signs of life, bolstering the notion that the improved durable goods orders may not be a onetime fluke. Many of the favorable factors were up--sales, dollar collections and amount of credit extended. Only new credit applications were down.

As far as the ...