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March CMI Indicates Economic Resiliency to Russia-Ukraine Conflict

The March NACM Credit Managers’ Index shows resiliency despite the widespread economic uncertainty that followed Russia’s invasion of Ukraine in late February. This month’s combined score rose 1.1 points to 58.9.

However, rising commodity prices and supply-chain disruptions relating to the ongoing conflict may soon start to weigh heavily on businesses, said NACM Economist Amy Crews Cutts, Ph.D., CBE. “Many producers are scrambling to line up new sources of raw materials to replace Russian and Ukrainian supplies, and the prices of affected commodities have jumped as a result,” she said. “I think April will see most of the breadth of the impact of the war on domestic businesses, but for now the CMI supports a strong growth outlook.”

The combined index of favorable factors grew 3.7 points (70.5). Every favorable factor improved. Sales jumped 5.8 points (77.1); new credit applications, 4.7 points (68.8); dollar collections, 3.9 points (67.0); and amount of credit extended, 0.4 points (69.2).

However, the combined index of unfavorable factors saw a 0.6-point drop (51.2). Within the index, all factors declined except for dollar amount beyond terms, which gained 0.3 points (51.2). Disputes and dollar amount of customer deductions both fell deeper into contraction territory, dropping to readings of 48.0 and 49.0, respectively. Accounts placed for collection fell 1.2 points (51.5); filings for bankruptcies, 0.6 points (55.8); and rejections of credit applications, 0.4 points (51.9).

“It’s an embarrassment of riches in terms of demand as represented by the index of favorable factors, yet businesses are struggling to get things done as they can’t get the parts or transportation when they need them,” Cutts said. “Now add in the costs of fuel and other inputs, and they are feeling the squeeze as represented by the index of unfavorable factors, especially disputes and the dollar amount of deductions.”

What respondents are saying:

  • “Orders and sales figures partially offset by increased selling prices. Production is down as we are producing to order, not inventory given the higher input prices.”

  • “Although sales are improving to specific category groups and demand is still strong for every group, we continue to experience raw material and supply chain disruptions; and this is expected to continue through at least Q3.”

  • “We would increase production, but supply chain issues are holding us back.”

  • “Parts and component shortages are affecting sales and deliverables. Back orders are extreme from source, Asia Manufacturing.”

  • “Supply chain limitations and delays continue to negatively impact production.”

  • “Our business is doing great so far this year; and now with the price of oil up, our oil and gas business is really increasing as well.”

  • “There are more applicants because customers are shopping sources, but we still are doing all we can near full capacity.”

If you would like to participate in the monthly CMI, sign up to receive survey participation alerts. For a complete breakdown of manufacturing and service sector data and graphics, view the March 2022 report. CMI archives also may be viewed on NACM’s website.

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