Slowed GDP growth over the past two quarters, weakness in the labor sector and “modest holiday sales” add up to a soft economic picture, according to the Credit Manager’s Index, which dropped for the fifth consecutive month.

The CMI fell 0.5 percent in December, and is at its lowest level since April 2003, said the National Association of Credit Management, which conducts the monthly survey.

Dan North, chief economist with credit insurer Euler Hermes ACI, said in a statement that seven of the 10 components of the CMI declined last month. “Four of the components are now under the 50 level, signaling contraction, the most since March of 2002.”

The NACM said in its report that the “CMI data strongly suggests a slowing economy, and remains consistent with data from the rest of the macro-economy, indicating a slowdown.” The macroeconomic data cited include Gross Domestic Product growth that has slowed for the past two consecutive quarters and declining durable goods orders (not including transportation). Also weighing down the economic outlook are holiday sales that fell short of expectations and a labor market that is showing “signs of weakness.”

However, the NACM said the manufacturing sector “has shown an increase in the past two months, primarily on sales, boding well for the future months.” Still, the NACM said, “Comments from survey participants, and a closer look at the data, still show signs of weakness.”

This story first appeared in the January 3, 2007 issue of WWD. Subscribe Today.

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