The movement in this month's National Association of Credit Managementâ€™s economic report was certainly less than impressive, but the overall index is still solidly in the expansion zone. The most troubling sign is that companies seem to be getting into more distress and that might affect future performance.
Columbia, MD: June 30, 2014â€”This monthâ€™s Credit Managersâ€™ Index (CMI) reading from the National Association of Credit Management (NACM) was 56.1â€”barely higher than it was in April, but falling well below Mayâ€™s 56.8. The readings had been closing in on 60 (57.1 in November and 57.3 in January) and are still firmly in positive territory, but are now just not trending in the preferred direction. The services sector took the brunt of the impact, and the manufacturing sector did not budge, for the second month in a row.
After the readings last month, it was thought that the CMI would show continued progress, but the manufacturing sector was flat and the service sector experienced a very sharp declineâ€”enough to drag the index down. â€śThe drop was unexpected, which has suddenly become a common refrain as some other data releases are starting to show similar trends,â€ť said NACM Economist Chris Kuehl, PhD. The economy is clearly not out of the woods just yet, and the latest revision of first quarter GDP came as a shock. â€śIt now appears that the economy contracted by far more than originally reported,â€ť Kuehl said. â€śAdd to this the latest data on durable goods and there is something amiss. Consumer confidence numbers have recovered to levels not seen since the start of the recession, but that renewed level of enthusiasm has not been enough to pull the economy forward, or so it would seem.â€ť