NACM Credit Manager's Index for April Shows Growth

After a strong first quarter, NACM?s CMI for April continues to show growth. The CMI rose for the third straight month to 59.3, strongly indicating a continued economic expansion, and mirroring the positive economic growth of Thursday?s GDP report as well as today?s better-than-expected reports on personal income and personal spending.

The CMI manufacturing sector was flat, but the services sector, boosted by a whopping 11-point increase in dollar collections, rose for the third straight month to 60.2, an overall change of 3.44 percent, indicating accelerating growth. Both the manufacturing and service sectors have recovered from January?s plunge, but they still remain below last April?s peak.

Dan North, Economist with Euler Hermes ACI, speculates that this may reflect the drag caused by high commodities prices, especially oil; and that these higher prices, combined with the likelihood of more interest rate hikes from the Fed, may put a drag on the economy in the coming months.

Service Sector Results
Higher dollar collections along with lower dollar amounts beyond terms pushed the Service CMI to its highest level in 10 months. A lower number of disputes and fewer accounts placed for collection also helped to push the Service CMI higher, finishing up 200 basis points, to close at 60.2 percent. Of the 10 factors, nine posted levels at or above 50, indicating an expanding economy.

Comparison of March 2005 to March 2004
As we look at the current levels of favorable and unfavorable factors and compare these to just one year ago, we find both periods to be rather similar. A review of the favorable factors reveals that although the April 05 factors show an expanding economy, the level of new sales is 740 basis points lower than a year ago. This can be seen in both the service and manufacturing sector. An analysis of the unfavorable factors shows that, within the manufacturing sector, accounts placed for collections accounted for the largest change. While in the service sector, the largest changes were found in dollar amounts of customer deductions and bankruptcy filings.

To view the entire release, please visit http://www.nacm.org/resource/press_release/pressApr05.html.