Credit Managers See Slowdown

Columbia, Md. — With the nation's corporate credit watchdogs growing more wary, the monthly Credit Managers' Index fell for a fifth straight month in December, dropping to its lowest level in almost three years, since April 2003.

The National Association of Credit Management (NACM) said its index fell 0.5% to a reading of 54.7, with seven of the 10 components of the index heading south.

The trade group said information coming from its members "strongly suggests a slowing economy, and remains consistent with data from the rest of the macro-economy indicating a slowdown," specifically weak GDP growth for two straight quarters, weakness in durable goods orders, modest holiday sales, and signs of weakness in the labor markets.

The manufacturing sector showed signs of improvement, helped by rising sales, the NACM reported. Even so, five of the 10 components that make up the manufacturing index fell, but were offset by big gains in sales, new credit applications, and a lower rate of bankruptcies.

The service sector fell for a third straight month, dropping 2.5% as eight of the 10 index components declined.

Measured on a year-over-year basis, the Credit Managers' Index has fallen 3.6% to a level of 54.7 with nine of the 10 components falling. The 12-month drop was driven mostly by deterioration in the services sector, which fell 7.5%. Manufacturing eked out a slender gain of 0.4%. "Overall, the year-over-year data continues to suggest an economy slowly weakening under the strain of tightened monetary policy and a decimated housing market," the NACM reported.