CMI Preview: Index Surges on Holiday Retail Boom



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NACM’s monthly Credit Manager’s Index for December, to be unveiled in full Thursday afternoon at www.nacm.org, will illustrate solid games for the final month of the year. But, like most months, the service and manufacturing sectors aren’t exactly on the same page.


“Throughout the year, the manufacturing and service sectors exchanged positions with one another, and it was a rare month when both sectors were on the same track,” said NACM Economist Chris Kuehl, PhD. “December was no exception. The service sector grew much faster than manufacturing due to the strength of the retail segments of the index.”

The latter observation was to be expected, as sales usually surge on holiday gift shopping and manufacturing typically peters out late in the fourth-quarter. To wit, the service side of the CMI should show the highest readings since May though not quite to levels reached at the end of 2010. And favorable factors levels for the service sector remain high, with hope that anything that even closely resembles stability between 4Q2011 and 1Q2012 will be taken as a sign for much better economic growth in 2012. A key is avoiding some type of unforeseen catastrophe to shake confidence, like last year.

“This was the expectation at the end of 2010, but that was before the appearance of problems that beset the economy as a result of the supply chain disruption from the Japanese earthquake and tsunami as well as the impact on oil pricing from the Arab Spring and the violence that took Libya out of the oil markets for the foreseeable future,” Kuehl said.

However, favorable factors for the manufacturing sector going forward may be increasingly difficult to find.

(Editor’s Note: For the full data and analysis of the December CMI, check on www.nacm.org Thursday afternoon).

Brian Shappell, NACM staff writer

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