Credit Managers' Index Stalled Amid Harsh Finish to Winter

The Credit Managers’ Index (CMI) from the National Association of Credit Management (NACM), to be unveiled Monday on the NACM website, will show little change in the readings for March. The stall at February and December levels leaves January’s spike as the anomaly in recent months.

The March CMI should provide cautious expectations of consistent future growth. It was hoped that the February reading was the outlier, rather than a grim thesis for the rest of 2014, but a holding pattern due in part to the effects of a harsh winter is preferred to a decline, leaving room for some optimism about the economy in months to come.

Most of the factors comprising the March CMI stayed the same from the previous month, especially where the unfavorable factor index is concerned, with a few notable exceptions. Those looking for positive information are most likely to find it in categories like amount of credit extended.

“A rise in amount of credit extended is better news than it might seem, as it suggests some anticipation for better days ahead,” said NACM Economist Chris Kuehl. “That credit was being extended despite the drop in applications for credit is a good sign in general.”

That said, if there was in fact little movement in most CMI categories, what accounts for this? Kuehl again cited the unusually long and bitter winter, like so many others: “The CMI isn’t far from readings registered in other segments of the economy. The latest durable goods numbers, industrial production numbers and other measures have been flat as well. Ample evidence suggests that weather caused a great deal of disruption in almost every category. The transportation system was paralyzed several times, affecting everything from manufacturing to retail.”

In short, March feels like a holding pattern month, as the effects of an unpredictable winter fade. Kuehl said overall, even if the CMI flattened out at a fairly unimpressive level, there are reasons within the index's categories to believe the business community remains encouraged and optimistic about growth potential, but with a "bias toward caution." 


For a full breakdown of the manufacturing and service sector data and visuals, view the latest complete  report at on Monday afternoon. CMI archives may also be viewed on NACM’s website at

Flash Euro PMI Only a Touch Off Near-Three-Year High

Europe appears to be posting data that finally suggests a sustained rise in economic conditions in the region. The latest Markit Flash Eurozone PMI (Purchasing Managers’ Index) tracked at 53.2, down a fraction from the 32-month high (53.3) posted last month. Updated, more detailed figures are expected to trickle in during the next week or two, but the Flash numbers looked promising.

German activity was somewhat off, though it remains the inarguable driver on the continent. The number two economy, France, was particularly lauded for finally getting back on track and showing signs of stability that are anything but fleeting. There was also another rise in both output and new orders within key, large economies like Italy and Spain. For the latter, it marks the fourth consecutive increase in both categories and provide continued needed optimism for a nation that in recent years saw unemployment rates near 25%.

This isn’t to say all is well economically. Several nations and its businesses are bouncing back from a harrowing low, face high debt issues that seem to be continually spotlighted by US-based credit ratings agencies and remain unsure just how much the Ukraine-Russia dispute will affect growth. Still, comparatively, conditions have not been so bright in the EU as a whole at any point during this decade. 

- Brian Shappell, CBA, CICP, NACM staff writer
Look for NACM’s coverage roundup of Markit PMI statistics and analysis from more than a dozen key countries in the April 3 edition of eNews at

STS Update: Mississippi Lien Bill Heads to Governor

A new bill awaiting the signature of Mississippi Governor Phil Bryant will expand lien rights to subcontractors in that state.

After previously passing the Senate and then overcoming some minor hurdles in the House, the state legislature advanced a final version of Senate Bill 2622 out of conference committee late last week. Once the bill is signed into law, subcontractors working in Mississippi will immediately have access to the lien rights that have previously only applied to general contractors, or any party with a direct contract with the owner of a project.

The enactment of SB 2622 would bring an end to a saga that began with the Mississippi Supreme Court's declaration last fall that the state's stop notice statute was unconstitutional. Before SB 2622 emerged, stop notices were one of the only payment protections for Mississippi subcontractors. After it was voided by the state Supreme Court's ruling, advocates scrambled to enact a new lien statute, the result of which is now SB 2622.

- Jacob Barron, CICP, NACM staff writer

Stay tuned for more in tomorrow's edition of NACM's eNews.

Positive Underlying Trends Abound in Housing

Though the latest housing data show monthly declines, two reports released Tuesday offer hope that statistics may improve more dramatically once the impact of frigid and storm-laden winter passes.

The S&P (Standard & Poor’s)/Case-Shiller Home Prices Indices showed almost no change from December 2013 to January in the 10-City Composite and a 0.1% decline in the 20-City Composite. The best performance came again from Las Vegas, which posted a 1.1% gain during the period. Seattle fell the hardest month-to-month at -0.8%.

Change between January 2013 and January 2014 showed positive news, with 13.5% and 13.2% annual rises, respectively, for the 10- and 20-City Composites. In fact, all 20 showed annual gains with 13 of them in double-figures. Cleveland showed the most anemic rise (4%). Las Vegas also led the way in that distinction falling just short of a 25% increase. Granted, analysts noted the Nevada city remains farthest from its peak level of the last decade than any other city tracked. Dallas and Denver, with a 10% and 9% increase each, were about middle of the pack but actually are closest to all-time index highs.

The slightly poor monthly numbers were all but expected because of the weather. Such was the same in the latest residential real estate sales for February 2014, released Tuesday by the US Department of Commerce. Sales dropped a less-than-expected 3.3% from January to February. Also noteworthy is that, while home prices are rising, analysts suspect this has more to do with a lack of supply in the types of housing buyers are now looking for (Re: not “McMansions”). 

- Brian Shappell, CBA, CICP, NACM staff writer

Fitch Knocks Russia, Affirms US Credit Rating in Wake of Tit-For-Tat Sanctions

Today's actions by big-3 ratings powerhouse Fitch threw some cold water on the fevered threat of a "new Cold War" between the US and Russia after the latter's absorption of Crimea. While Russia certainly has the US beat in terms of land area, nuclear stockpile and proven oil reserves, America's economy remains eight times larger than Russia's, making it better suited to withstand whatever economic sanctions that Moscow might eventually aim to lob at its Western rivals.

Russia, on the other hand, remains far more susceptible to economic turmoil, as illustrated by this morning's negative revision by Fitch to its outlook on Russia's long-term foreign and local currency issuer default ratings. In its downgrade, Fitch specifically cited "the potential impact of sanctions on Russia's economy and business environment," noting that the financial retaliation against Russia's incursion into Ukraine could exacerbate an already shaky economic situation characterized by slowing GDP growth and reduced investment.

"Since US and EU banks and investors may well be reluctant to lend to Russia under the current circumstances, the economy may slow further and the private sector may require official support," Fitch said, noting that while the direct impact of the sanctions so far has been minor, "the incorporation of Crimea into the Russian Federation will likely lead the EU and US to extend sanctions further in response. Furthermore, foreign investors may anticipate further official action and restrict Russian entities' access to external financing."

The US and EU previously placed visa restrictions on specific allies of Russian President Vladimir Putin while also freezing their property and assets. In response, Putin barred a handful of American officials and lawmakers from Moscow. The former action is expected to have greater economic ramifications than the latter, to put it mildly, and Fitch knows it too. An hour after downgrading Russia, Fitch affirmed the US' 'AAA' credit rating and bumped its rating watch to stable, after marking it down to negative following the debt ceiling crisis in the fall of 2013.

The timing of the affirmation was incidental, as Fitch's ruling on the US aligned with its previously set review schedule. Nonetheless, the contrast between the economic standing of these two superpowers locking horns on the geopolitical stage is worth remembering.

- Jacob Barron, CICP, NACM staff writer

Ukraine Crisis, Potential "Hard Landing" in China Posing Greatest Threats to Global Trade

According to the latest data from Wells Fargo Securities, LLC, global GDP growth is expected to track close to its long-run average of 3.6% in 2014. This would mark an improvement over 2013's figure, when a fiscal headwind in the US and a recession in the Eurozone during the first half of the year constrained global GDP growth to roughly 3%.

Still, two major downside risks pose the greatest threats to expectations for continued global expansion, most notably the ongoing crisis in Ukraine and the open question of whether or not China can successfully engineer a "soft landing" for its economy.

Most recently the Ukrainian government essentially conceded defeat in Crimea, withdrawing its troops after the predominantly pro-Russian region voted overwhelmingly to secede from Ukraine and was annexed by Russia shortly thereafter. Sanctions have already been imposed by the US and the EU, but the west has left itself plenty of room for more severe economic restrictions, which could provoke the Kremlin into responding in kind.

"If the US and the EU impose sanctions on Russia, the Kremlin could retaliate by imposing an embargo of its energy exports," Wells Fargo said in a report. "A long-lasting embargo, should one occur, would surely lead to another deep recession in the Eurozone." A Russian oil embargo could also cause prices to spike which could potentially slow global growth significantly.

In China, Wells Fargo noted that the business sector has become more leveraged over the past few years and with growth in China slowing, even to a still solid 7.5% as expected in 2014, more Chinese companies have announced that they will be unable to service their debts and could be facing default. "Although we do not expect a full-blown debt crisis to transpire in China, the Chinese economy is opaque, which complicates analysis, relative to most western economies," they added. "A 'hard landing' in China, the second-largest economy in the world, surely would have negative consequences for global economic growth."

- Jacob Barron, CICP, NACM staff writer

Fed Holds the Line, Hints at Policy Changes

In its first meeting with Janet Yellen as the chairperson, the Federal Reserve surprised few by continuing the direction on rates and tapering set out during the final months of her predecessor, Ben Bernanke. But the tone of its March 19 statement did intimate some movement could be coming in at least one of those areas and that some at the Fed are deeply concerned with moving targets.

The Federal Open Market Committee (FOMC) found that, despite economic growth rates slowing during the winter months – blamed almost entirely on historically bad weather in several regions, “there is sufficient underlying strength in the broader economy to support ongoing improvement” in areas including growth and labor conditions. As such, the FOMC opted to continuing pulling back on its stimulus by a total of $10 million in two areas: from $30 billion to $25 billion per month in agency mortgage-backed securities purchases and from $35 billion to $30 billion per month in adding longer-term Treasury securities.  The Fed statement predicted it would continue the tapering should conditions stay in line with expectations, but they also left enough vague text to hint at a change in the rate of asset purchase reductions: “Asset purchases are not on a preset course.”

The FOMC also left the target for the federal funds rate untouched at a range between 0% and 1/4%. What is notable is that the Fed, under Bernanke, had said it would likely begin raising the level once unemployment fell to 6.5%. It has dropped to a lower-than-expected 6.75%. As such, the Fed has changed the language of it guidance to note that it should be expected that the target for the federal funds rate will no longer be moved at that point and that, rather, various economic condition “may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal.”

All but one FOMC member, Narayana Kocherlakota, voted in favor of the actions. Kocherlakota believed some of the policy actions and wording, especially on rates, “weakens the credibility of the Committee’s commitment to return inflation to the 2% target” and “fosters policy uncertainty that hinders economic activity.”

- Brian Shappell, CBA, CICP, NACM staff writer

Industries to Watch: US Agriculture

It’s been at least a half-decade since US agriculture and downstream industries have faced this much danger so early in the year. In 2014, creditors dealing in the industry need to be aware that some long-term problems could be compounded by domestic weather and geopolitical strife, landing US agriculture firmly on the National Association of Credit Management’s Industries to Watch list.

A number of headwinds are in play against the agriculture industry. The Federal Reserve’s Beige Book economic roundup has documented ongoing drought conditions leading to poor crop yields in some areas while NACM Economist Christ Kuehl, PhD, noted a general reduction in the size of herds plus a serious virus that destroyed almost 10% of the usual pork production. This could lead to shortages in supply and higher prices once the large quantity of frozen product is used up.

Long-standing drought issues were joined by one of the most unpredictable winters in recent memory, which plagued many regions. Beige Book contacts noted in recent weeks that major weather-related crop damage was apparent in places like District 5 (Richmond) and District 6 (Chicago), among others. The Beige Book also found crop prices at a lower point in January 2014 than a year earlier for a number of products including corn, wheat and soybeans. There was some good news, though, in the form of improved soil conditions in the Southeast and, for producers, higher prices for cotton and rice. However, it seems there is significantly more negativity surrounding the industry than positives. Kuehl said issues facing the Ag industry have commodities analysts and other experts worried.

“This is shaping up to be the year when all the travails in the agricultural world start to catch up with the markets,” he warned. “There has been an unrelenting series of problems affecting farm output in the US as well as most of the rest of the world.” While some of the issues will result in higher food prices in stores, only so much can realistically be passed on before a change in buying habits and even deeper problems take hold. 

All of that fails to even take into account the elephant in the room: potential energy price increases. In 2008, energy prices spiked due to crude oil exceeding $145 a barrel, Kuehl recalled. At the same time, food costs rose by 5.5%, resulting in a number of problems. He called the oil price volatility in 2014 somewhat less threatening, for now, but suggested recent escalating turmoil in the Middle East and Eastern Europe that has dominated the world news of late could easily spin further out of control at any time. If that occurs, the most likely scenario is quick and painful price spikes that the Ag industry is unprepared to handle at present.  

- Brian Shappell, CBA, CICP, NACM staff writer

Updated: Busy Week Ahead for the Data Wonks

There are weeks when the analyst is left trying to make sense of the economy without much to work with and then there are weeks like this one when the calendar is packed with data that might make the current economic trend a little easier to puzzle out. The role of data is always debated as there is no such thing as perfect information and there is no way to accurately predict the future. The best that can be done is to look at what has happened in the past and assume that what motivated people before will motivate them again. The adage that has always been applied to data is never truer than when applied to economics—“you can have data that is fast or you can have data that is accurate, but you can’t have both.” The economic data that gets released this week is a mixed bag of immediate information and some reassessment of older information.

One meeting that will create a lot of interest will be that of the Federal Reserve’s Federal Open Market Committee. This meeting is getting more than normal attention due to the likely changes in how the Fed plans to deal with forward guidance on interest rate policy.

The old system of guidance held that the unemployment rate would be a trigger for Fed action—a rate of 6.5% would be low enough for the Fed to think about hiking interest rates. It is now clear that no such action is under consideration despite the fact that the jobless rate is now at 6.7%. Meanwhile, it is almost certain the Fed will stay on course with the tapering process with another $10 billion reduction in bond-buying.

A second thing to watch for this week will be housing data. This is the sector that is the most affected by bad weather, as it is just not possible to do much in the way of construction during bitter cold and snowstorms. The lousy weather in January was responsible for a 16% decline in activity, and the expectation is that February will recover by less than 4%. If there is no uptick in the latest data there is going to be some real fear for the spring.

The third set of releases to focus on will be the numbers on industrial production. Industrial production stats include the output that comes from the manufacturing sector as well as utility output. It will be necessary to dig further down into the data to separate the good news in the utility sector from the bad news in the rest of the industrial sector, as profits for the utilities generally means costs for everybody else.

The data this week will not answer every economic question, but it may give some hint as to what impact the weather has had and whether the Fed is at all concerned about it. If recurring problems are still present after the spring flowers bloom, there will be more reason to worry.

- Chris Kuehl, PhD, Armada Corporate Intelligence

FCIB Roundtable Spotlights International Dispute Resolution, Regulatory Risks and Resources

Trends in dispute resolution between exporters and their international buyers seem to suggest that the entire process is in the middle of a shift toward the informal. Emerging markets are where the opportunities are, and so exports continue to flow to these countries, but their legal systems remain far less sophisticated than those in the US or the European Union. As such, alternatives to resolving a dispute in court have become more and more popular among international business partners.

"I don't think arbitration is as efficient as it used to be, but I think we're moving away from litigation to arbitration," said Robert Brown, an attorney with Greenebaum Doll & McDonald PLLC, at this week's FCIB New York Roundtable, hosted at the offices of Lowenstein Sandler PC. "I think trade is always moving in that direction, toward easier transactions."

A look into the shift in international dispute resolution was just one of the many insights shared by presenters at the Roundtable. Brown, in addition to discussing international dispute resolution, also delved into the intricacies of the Foreign Corrupt Practices Act (FCPA) and US anti-money laundering regulations, warning attendees to remain vigilant or face the steep fines, or even possible jail time, for non-compliance.

"Money laundering is a bigger problem for you than the FCPA. The federal government is shifting over more of its resources to the money laundering division and they will charge that FCPA violation as a money laundering violation because they can charge foreign officials under the Money Laundering Control Act (MLCA), but not under the FCPA," Brown said. "They're also more likely to get cooperation from a foreign government under the MLCA because they share the proceeds," he added, noting that violations of the MLCA often carry much more severe penalties, including possible prison time. "This is great leverage for when people are asking you for a sale and it gives you red flags that you need to be worried about," he said. "You now have the authority to say 'I need more information' or you can say 'I'm just trying to keep you from going to jail.'"

Yuki Fujiyama, ICCE, trade finance specialist with the US Department of Commerce's International Trade Administration (ITA), was also on hand to illustrate the many ways that his agency can help US exporters make the best of foreign markets. Fujiyama provided just a brief overview of the ITA's vast resources and industry connections that can help any company, large or small, determine how the US government can help them advance their business through financing for new exports to key markets, and then fielded specific questions from attendees about how their companies can get on board. Fujiyama also discussed ITA's rich history of collaboration with organizations like FCIB, which allows each party to more effectively support every exporter's efforts to grow their business, and the US economy through international sales.

To learn more about FCIB and how we can help your company expand internationally, visit For more coverage, check out this week's edition of NACM's eNews and the next issue of Business Credit.

- Jacob Barron, CICP, NACM staff writer

Corporates More Bullish on Mexico than Brazil

Whether fair or appropriate to lump them together, corporate officials, credit people and other market-watchers often tend to discuss Brazil and Mexico at the same time whenever the topic of prospects in Latin and South America arises. A March study by Fitch Ratings finds somewhat of a mixed bag regarding the outlook of each on the part of corporates.

Fitch’s study, which took place late 2013’s fourth quarter, indicates few are expecting particularly hot activity out of either nation early in 2014. However, the sentiment of those contacted by Fitch seems to indicate Mexico is expected to continue charging forward and, in the long term, at a much faster clip than Brazil, which has far more problems facing it. Fitch analysts noted that Mexico should benefit from the present regime having a year at this point to start implementing policies and, essentially, to get their feet under themselves. Optimism for Mexico also exists in part because of the expected continuation of recovery in US growth as well as energy reform in the form of Petroleos Mexicanos (Pemex) opening up to private investment and more service provider partnerships, including with those based in the US.

“Over the long run, energy reform should allow Pemex to reverse decades of under-exploration and production declines stemming from constrained investment,” said Fitch. “The greatest potential for significant production boost lies in deepwater crude and unconventional shale gas.” 

Meanwhile, in Brazil, service providers were particularly disappointed in Brazilian activity in late 2013, and elevated inflation – much worse than that of Mexico – is a large and growing issue. This is expected to escalate as the US continues to tighten its stimulus effort through its Federal Reserve and other means. That’s not to say every sector has been hit hard there or that Brazil is bereft of opportunities.

“The economy of Brazil continues to be challenging to forecast…however, the agricultural sector has experienced record harvests, which has had a positive impact on the trucking business,” a representative from Meritor Inc. reported to Fitch. “Infrastructure demands also continue to be high due to the upcoming World Cup and 2016 Olympics.”

- Brian Shappell, CBA, CICP, NACM staff writer
See more on the newfound problems facing emerging markets like Brazil, Mexico and others in the April edition of Business Credit Magazine, available late this month in print for and online at

Controversial Judge Grants Temporary Bankruptcy Protection to Now Infamous Monetary Exchange

A Texas-based federal judge granted temporary bankruptcy protection on March 10 to a digital monetary exchange facing lawsuits on two continents amid the puzzling disappearance of holdings that equate to millions of dollars because of either hacking, fraud, mismanagement or all of the above.

Judge Harlin Hale has, for the time being, allowed the Mt. Gox bitcoin exchange to pursue Chapter 15 insolvency protection through the American court system. Mt. Gox, which is based in Japan despite being founded by a US national and eventually sold to a French national whose assets were frozen by a US district court judge on March 11, is attempting to invoke the cross-border bankruptcy provision in the wake of the disappearance in more than 700,000 customer bitcoins (online currency holdings). The filing is thick with irony as those who originally spearheaded the development of bitcoin were doing so to set up an alternative to the US dollar and other major currencies, seeking to be free of almost any government regulation and oversight.

Lawsuits are now pending, including a domestic class action suit starting in Chicago, in the United States and Japan, with more expected. The case is intriguing because digital currency is so new and non-mainstream that it remains almost entirely unregulated by governments.

- Brian Shappell, CBA, CICP, NACM staff writer
See more analysis in the extended version of this story in this week's edition of eNews, available late Thursday afternoon at 

The ‘Ukraine of the (Far) East’?

Analysts watching the escalating tension in Thailand have started to warn that things could easily grow as bad there as Ukraine, and with far more significance to US business.

Thailand is a key economy in Southeast Asia and figures far more prominently in the US economy than does Ukraine. The economy is three times the size and a major trading partner for the US. The role Thailand plays in the region is second only to China. As such, it is baffling that almost no attention is being focused on the Thai situation

The tensions in Thailand have existed for many years and, periodically, they spill out in the form of some temporary violence in the streets that seem to subside briefly enough. This time may be different, as there seems no desire on the part of the players to engage with one another. For the first time, there are those who are seriously considering a division of the nation into two parts—a rural north and an urban south. The disputes that have resulted in government paralysis revolve around the fact these two parts of the country are at odds with one another on a constant basis. Thailand started to split over the issues of the north vs. the issues of the south, and that has intensified in the last year.

The calls for support for the current leadership are mixing with those that call for actual secession. Right now this seems a remote possibility given the centuries of Siamese unity, but many would have said the same about Ukraine until recently. The two sides in Thailand are not negotiating with each other either, and that deepens the animosity. The army has yet to step in, but that is always a possibility in Thailand.

All told, the division of the country will not likely take place in a formal way. But the divisions are severe enough to challenge the economy and could compromise growth for years.

- Chris Kuehl, PhD, Armada Corporate Intelligence

Fed Beige Book Regional Breakdown: Trends Still Positive

Though some districts were negatively affected by the much-discussed cold and snowy/icy winter weather, most of the country continued to expand at a modest to moderate place in January and early February, according to the Federal Reserve’s Beige Book economic roundup.

First District (Boston): Most manufacturers reported heightened activity in the district. Those tied to construction felt a slightly dip, mainly because weather stunted activity therein. The commercial and residential real estate sectors were somewhat mixed, though leaning positive, on greater economic uncertainty.

Second District (New York): Sales were down noticeably as this district was among the most impacted by snow and ice storms. Manufacturing and service sector firms report positive plans to increase staffing levels, on aggregate. Commercial lending activity remained largely unchanged, save for a slight decline in delinquency rates.

Third District (Philadelphia): Like New York, the district’s struggles were tied more to horrendous weather than mid- or long-term downward trends. But it did put stress on manufacturing, real estate and retail during the opening period of 2014.

Fourth District (Cleveland): Weather was more an “inconvenience” than a growth-slowing problem. The auto industry and energy sector (shale gas, primarily) continued to show strength. Manufacturing production was on-pace with or better than a year ago in most quarters. Business delinquency rates were stable or trending lower.

Fifth District (Richmond): Retail and manufacturing orders showed an uptick that is expected to accelerate with more favorable weather in the spring. Eastern port activity was mixed, especially where agricultural products were concerned. Agriculture contacts noted declining prices for crops and higher input prices. Non-residential construction was strong in Washington, DC, but not elsewhere.

Sixth District (Atlanta): Expansion continues, albeit slowly, mostly on the back of tourism from internationals. Residential and commercial builders showed increased optimism amid recent improvements. Manufacturing and port contacts expect acceleration in activity levels over the next three-to-six months. Agriculture struggled amid dry soil conditions.

Seventh District (Chicago): This was one of only four districts that did not show growth. Builders, manufacturers, farmers and retailers were all hit by brutal winter conditions, even by upper-Midwestern standards. Credit conditions changed little. Plans for business capital expenditures and other expansion in key sectors trended upwards.

Eighth District (St. Louis): Manufacturing is outperforming service sector counterparts significantly. Manufacturers spent more money on equipment and workers, with auto and plastic producers leading the way. Residential and commercial real estate showed strong gains. Commercial loan demand increased, while delinquencies fell again. Coal production was among the industries that declined significantly.

Ninth District (Minneapolis): Most industries, with exceptions of residential real estate and agriculture, showed moderate growth. New hotel construction is proving to be a boon for suppliers and employment in that sector, though others in retail had setbacks. Service sector contacts reported reasons for optimism. The energy sector sputtered slightly, which is expected in the upper Midwest at this time of year. Farming conditions also unsurprisingly continued to soften.

Tenth District (Kansas City): Growth was stable and expected to show an uptick as early as the next period. Manufacturers, especially of durable goods, saw a fast rise in new orders, production and shipment. Real estate activity decreased, by only slightly. Business credit lending standards showed little change. Agricultural conditions deteriorate throughout the period. Natural gas producers enjoyed strength, but a temporary price drop is on the horizon in the short term.

Eleventh District (Dallas): Manufacturing grew on aggregate with particular bright spots in food and energy production. Though retail was down for the period, which is not shocking after the holiday shopping season, but the outlook is positive. Drought conditions made it a tough go for agriculture. Commercial construction activity was strong.

Twelfth District (San Francisco): Moderate expansion was noted. Commercial loan demand trended upward. Manufacturing was a bit mixed, though semiconductor sales showed record levels through late 2013 with expectations for more growth. Agricultural activity expanded on balance. Demand for business and consumer services rose.

- Brian Shappell, CBA, CICP, NACM staff writer

Obama Orders Sanctions, US Reaches Out to Moldova, Georgia as Ukraine Crisis Continues

President Barack Obama issued a broad Executive Order today aimed at any and all parties determined to be “responsible for or complicit in” threatening the sovereignty of Ukraine. The full Order names no entity specifically, blocking “all property and interests in property that are in the US, that hereafter come within the US, or that are or hereafter come within the possession or control of any US person (including any foreign branch)” of any party the Treasury and State Departments determines is contributing to the ongoing situation in Ukraine.

Blocking “all property and interests in property” prohibits US companies from making any contribution or provision of funds, goods or services by, to or for the benefit of any person whose property and interests in property are blocked, pursuant to the Order. Since its stipulations are so broadly drawn, the Order could have serious ramifications for US companies with interests in the area, and these entities should immediately review their dealings with customers in the region to avoid running violating the Order.

The sanctions were the latest step taken by the US as it scrambles, with the European Union, to punish the Kremlin's incursion into Ukraine's Crimean peninsula. "This EO is a flexible tool that will allow us to sanction those who are most directly involved in destabilizing Ukraine, including the military intervention in Crimea," said White House Press Secretary Jay Carney, adding that the Order "does not preclude further steps should the situation deteriorate."

Prior to the Order, the US had previously moved to shore up its other trade ties in the region, as Trade Representative Michael Froman reached out to the heads of two former Soviet satellite states that serve as important strategic buffers between Russia and the West. Just before the end of February, Froman met in Washington with Georgian Prime Minister Irakli Garibashvili to discuss the countries' shared interest in increasing bilateral trade and investment and continuing the US-Georgia High-Level Dialogue on Trade and Investment. Then, earlier this week, Froman and Moldova's Prime Minister Iurie Leanc─â opened the meeting of the US-Moldova Joint Commercial Commission, where officials worked to bolster trade between the US and Moldova as Froman confirmed US support for Moldova's efforts to integrate with Europe.

Russia has attempted in the recent past to bring both Georgia and Moldova further into their economic sphere of influence, most recently using flimsy accusations of impurities to ban imports of Moldovan wine last year to punish the country after it signed a free trade agreement with the EU. The West accommodated Moldova after the ban, with the EU reducing tariffs on the country's wine, which serves as the lynchpin of Moldova's agriculture industry, and Secretary Kerry announcing a US trade mission to help Moldovan exporters enter the American market. Froman's attempts to reach out to two countries previously targeted by Russia for potential buffer-state status are no coincidence, particularly as the Kremlin continues to assert itself in Crimea, and the Order, though broad, aims to isolate Russia without negatively affecting the US' strategially-important trade ties in the region.

- Jacob Barron, CICP, NACM staff writer

Global Manufacturing Rebound in Full Swing, Traditional Powers Leading the Way

The Global PMI, published by Markit in accordance with JPMorgan, reached 53.3 in February. That’s up slightly from the 53 posted in January and good for a 34-month high. “The global PMI has signaled expansion in each of the past 15 months and, in broad terms, maintained a gradual upward trend since April of last year,” Markit noted in a statement. However, “disparities remained between the developed and emerging markets.”

Among the winners were the United States and Europe, primarily the western and northern EU nations. The US Manufacturing PMI spike from 53.7 in January to 57.1 illustrated its sharpest improvement in manufacturing business conditions since May 2010, which Markit characterized as “robust.” New order growth and output both surged and should reassure the most important market watchers.

Meanwhile, the Eurozone Manufacturing PMI continued to impress with a reading of 53.2 in February. Though slightly off pace from January, it was expected given that last month represented a 32-month high. Importantly, positive news came from countries like France where most of last month’s gains were maintained and contraction eased.

On the flip side, statistics indicate PMI contraction in China, South Korea and Russia as well as lagging, below-average statistics in Brazil, India, Indonesia and Vietnam.

- Brian Shappell, CBA, CICP, NACM staff writer
More analysis and a chart roundup of conditions throughout the world will be included in the extended version of this story in this week's eNews, available late Thursday afternoon (EST).

Despite February Increase, Bankruptcies Expected to Remain Low in 2014

Bankruptcies increased in February, with total filings for last month increasing by 6% over January 2014's total. The total noncommercial filings for February also marked a 6% increase from January, but total commercial filings actually decreased last month by 3%, from 2,901 in January to 2,813 in February. Chapter 11 filings, however, notched the largest increase, jumping by 17% from 388 filings in January to 452 last month.

Despite the monthly uptick in filings, on a year-over-year basis, 2014's figures appear set to continue last year's decline. When compared to February 2013, total bankruptcy filings fell by 12% last month, while total commercial filings fell twice as steeply, with February 2014's total dropping by 24% from the number of cases filed in the same period last year. Total Chapter 11 filings also decreased by 27% in February 2014, down from the 619 Chapter 11 filings recorded in February 2013.

The same culprits that depressed filings in 2013 are expected to keep filings low this year as well. "Low interest rates, tighter lending standards and high costs to file continue to be reflected in fewer bankruptcy filings," said Samuel Gerdano, executive director of the American Bankruptcy Institute. "As these trends persist, expect bankruptcy filings to continue to decline in 2014."

On a per capita basis, the bankruptcy filing rate in February increase to 2.71 (total filings per 1,000 population), a slight increase from the 2.64 rate registered in January 2014. There were 2,578 average total cases filed per day in February 2014, marking a 12% decrease from the 2,942 total daily filings in February 2013. States with the highest per capital filing rates were Tennessee (6.02), Georgia (4.91), Alabama (4.82), Illinois (4.33) and Utah (4.06).

NACM's Credit Managers' Index (CMI) measures filings for bankruptcies as part of its index of unfavorable factors. In the most recent edition, the figure dropped from 60.5 to 58.5, a much steeper decline than expected, which signifies an increase in bankruptcy activity by respondents' customers and mirrors the month-to-month increase in filings between January and February. To learn more about the CMI, or to view the full February report, click here.

- Jacob Barron, CICP, NACM staff writer

Business in Egypt Beset by Strikes

The latest manifestation of the political crisis in Egypt has been the escalating number of strikes and industrial actions that have all but shut down the national economy. In the last month alone there have been strikes by the postal workers, bus drivers, doctors, pharmacists, teachers, steel workers and textile workers. These have been strikes that are supposedly connected to demands for higher wages also carry a strong political motivation behind these actions. The new government was sworn in this weekend, but the majority of the population sees this as no more than the continuation of the junta that has been running the country up to this point.

The economy has been in deep trouble since the start of the crisis that toppled the Mubarak regime and, later, the Morsi regime. The export sector has all but shuttered, and there is nothing left of the tourism industry that was once its second most important foreign income-earner. The billions that have arrived from the Gulf States slowed to a trickle when Morsi was ousted, and there has been no replacement for that largesse. At this point, the Europeans are not in a position to help and neither is the US.

The outlook for business in Egypt looks very bleak, as there is no natural place for the government to turn for help. The military takeover has alienated the Arab states, and there is no willingness on the part of former allies to engage. The population has become increasingly desperate and angry. The country has been borrowing to pay the bills, but that has become very expensive as it saddles the nation with future debt that may realistically never be repaid.

- Chris Kuehl, PhD, Armada Corporate Intelligence