World events are starting to have an impact on the US and other major economies, dampening the feeling of optimism that had been growing in the early months of this year.
The Credit Managers’ Index (CMI) for March 2011, prepared by the National Association of Credit Management, fell from 64.1 in February to 62.2 in March, reflecting a decline in sales, new credit applications, dollar collections and the amount of credit extended.
The overall sense of the March data, according to the NACM, is that the US economy is struggling to keep pace with events in the world that have drastically altered everything from commodity price expectations to sourcing decisions and credit allocation.
“It is important to note that the ripple effects of the events in the Middle East and Japan have only started to manifest and will be factors for months to come,” said Chris Kuehl, economic advisor for the NACM.
“The Japanese catastrophe has affected supply chains all over the US and Europe and that has added considerable expense to manufacturers being forced to find new suppliers or wait for weeks to get what they need from the affected region.”
The price per barrel of oil has jumped by almost $15 since December and that is now filtering into all sectors of the economy through higher transport costs. Price hikes in industrial metals are as bad now as they were in 2008, restricting companies’ ability to repay their debts.
“The anecdotal evidence suggests that most creditors are reacting to some short-term shocks but expect to be back to normal in the months to come—providing that the situation in the Middle East does not worsen appreciably,” said Kuehl.
