If there are some silver linings in this month’s report it is that there was not much change in terms of the favorable factors the index moved from 60.5 to 60.2. The sales data actually improved a little moving from 60 to 61.2, but that remains off the pace from earlier in the year when the sales index hit 64.4. Even better news came from “new credit applications” as they moved from 58.2 to 59.9. The bad news is the decline in the amount of credit extended shifting down from 64.6 to 61.3.
Part of that decline is attributed to the fact that less credit is being requested but there are many more who are asking for credit and are being denied. Last month the index of unfavorable factors did not shift all that much but this month there is more turmoil indicated by the data. There was a big change in the category of “dollar amount beyond terms: as the index moved from 50 to 48. As suggested last month the majority of the business community lacks the flexibility to handle many weeks of downturn before there are problems and this month’s index shows that this is the case. There was a shift in the index of “disputes”, moving from 50.7 to 49.4. Most of the other indices drooped a little but the big change was in dollars beyond terms and that often signals more issues in the next month or two. In the end the total index of unfavorable factors slid from 51.6 to 50.9 and that takes the readings back to what they were at the very start of the year. This is not catastrophic as this is close to where the readings have been for the past year but there had been some hope of some serious recovery gains by this point, not a reversal. At 50.9 the index is less than a point from sliding into contraction territory and that is a place the index of unfavorable factors has managed to avoid since October of 2011.
The sense of the index for this month is that nothing has developed to perk the economy up but neither is there evidence of an imminent crash. The gains that were made in the first few months have proven to be more ephemeral than expected and many have concluded that 2012 will not break the pattern of the spring swoon. The next challenge is to determine if this will be a long and difficult summer as they were in both 2011 and 2010. Nobody seems quite ready to make that declaration just yet
Source: Armada Corporate Intelligence