NACM Credit Manager's Index Report for March 2005

As the first quarter of 2005 comes to an end, significant growth is made in both the manufacturing and service sectors. Across the board, there was economic growth in every favorable factor.

Manufacturing Sector Results
Fueled by a 1,320 basis point jump in “dollar collections”, the manufacturing sector recorded its third consecutive period of economic growth, finishing at 58.5, up from 55.7 in February 2005. This is the highest level since August 2004. Significant gains in “sales” and “amount of credit extended” also helped push the manufacturing CMI higher.

Service Sector Results
The service sector also recorded its third consecutive period of economic growth finishing at 58.2. However, unlike the manufacturing sector, “new sales” and “credit extended” pushed the service CMI to its highest level since August 2004. These two favorable factors, new sales and credit extended, posted gains of 1,210 and 1,020 basis points, respectively. One area of concern is that erosion appears in four of the six unfavorable factors, with “accounts placed for collections” showing a 480 basis point decline.

Comparison of March 2005 TO March 2004
Even though the NACM CMI continued its positive growth in 2005, increasing from 55.6 (February 2005) to 58.4 (March 2005), a year-to-year comparison shows erosion in all but one factor. With the exception of “sales”, the 2005 manufacturing sector recorded factor levels that were very similar to its 2004 level, while in the service sector, nine of the 10 factors showed some level of erosion.

Methodology Appendix
The CMI data has been collected and tabulated monthly since February 2002. The index, published since January 2003, is based on a survey of about 500 trade credit managers during the last 10 days of the month, with about equal representation between manufacturing and service sectors. The survey asks respondents to comment on whether they are seeing improvement, deterioration, or no change for various favorable or unfavorable factors. There is representation from all States, except some of the less populated such as Vermont and Idaho.

For this entire release, please visit http://www.nacm.org/resource/press_release/pressMar05.html.