Report for December 2009
T
he reports on the economy have been mildly
encouraging at year’s end and now everyone’s
attention is turned to 2010—the year that is supposed
to provide the anticipated recovery. The December CMI
matched the mood of the economy as a whole—essentially flat, but showing some mild progress. The most
important aspect of the report is that the index
remained above the 50 mark that separates growth from
contraction and even showed a slight gain as it moved
from 52.3 to 52.9. “This is hardly the kind of advance
that provokes celebration, but given the gloomy assessments made about the 2009 holiday season, the gain is
certainly preferable to what had been anticipated,” said
Chris Kuehl, NACM economist.
The indicators that showed the least movement included sales and new credit applications. “This is to be
expected and is consistent with December readings in
past years,” said Kuehl. “This is the period in which
most manufacturers are in semi-hibernation unless the
retail community is frantically trying to bolster inventory. That was not the strategy employed by retail this
year; stores held the line on inventory and shoppers
eventually caved and bought what was available.” The
retail numbers thus far showed a gain of around 4.5%
over last year, but these are still preliminary. What did
NACM’s
Government
Business Group
Your Authority on
Facilitating Payment From
the Federal Government
The government should be
your best customer!
Let GBG show you how to work
with the Federal Government —
and get paid in 30 days or less.
Call 800-955-8815 to join today!
For more information, go to
www.nacm.org/govt/gbg_index.shtml.
54
Business Credit february 2010
show up as more positive was an increase in dollar collections and an expansion of credit extended. Both of
these data points bode well for the coming year, and the
fact that there is still evidence of companies seeking to
catch up on their debt is making it a bit easier to advance
credit. As has been stated many times and from a variety
of sources, the key to the economy’s healthy recovery is
the rebound in the credit markets. Thus far that recovery has been slow, but there continues to be a willingness to extend new credit and there is some sense that
more will become available in the coming year.
Other elements showing promise include the modest
improvement in unfavorable factors—disputes, rejection of credit applications and the like are still showing
declines. But one unfavorable factor—filings for bankruptcies—has deteriorated significantly. “There have
been more bankruptcies and that poses some longterm problems. The growth of bankruptcy activity is
not unexpected at this point in a recession, but until
these are worked through, there will be hesitation in the
market to extend credit to any but the most-healthy
companies,” Kuehl said. “As the economy rebounds, the
companies that have been struggling to survive will
start to encounter more aggressive competition, which
is often the straw that breaks the back of these weakened companies.”
The overall conclusion from this month’s data is that
the economy remains weak, but headed in the right
direction. The slow thaw in the credit markets is still
taking place and there are signs of expansion in both the
manufacturing and service sectors. There has been no
sign of explosive growth thus f \