COLUMBIA, Md. -
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.”
“The data suggest that businesses are experiencing an unpleasant combination of slower cash flow and expectations of slower consumer demand,” North noted. “Once again, the housing market continues to wreak havoc in the service sector.”
The CMI, a monthly survey of the business economy from the standpoint of commercial credit and collections, was launched in January 2003 to provide financial analysts with another strong economic indicator.
