Improvements in Sales Keeps CMI Moderately Positive

Columbia, Maryland: July 2, 2007 — The seasonally adjusted Credit Manager’s Index (CMI) rose a modest 0.5% in June as a 1.1% increase in the manufacturing sector offset a 0.2% decrease in the service sector. Results throughout the survey showed mostly small changes from the previous month. “The decimated housing market once again weighed heavily on suppliers of building materials in the service industry,” said Dan North, chief economist with credit insurer Euler Hermes ACI. “This condition seems likely to continue, given an increasing supply of homes for sale, sharp declines in housing permits and starts and the unprecedented fall of median year-over-year house prices for 10 consecutive months. Somewhat surprisingly, the manufacturing sector continues to expand on the back of an economy which continues to grow, albeit slowly.” Overall the report was moderately positive, reflecting the state of the economy as a whole.

The manufacturing sector rose 1.1%, chiefly as a result of improvements in sales and bankruptcies. Indeed, one respondent noted that they “have had no customer bankruptcy…” and “…no…collections.” “However,” said North, “it is important to note that the data was mixed as only six of the 10 components rose, and that comments from respondents were somewhat more inconsistent than usual, indicating lack of a definitive consensus opinion.”

The service sector fell 0.2% as modest improvements in new credit applications and the amount of credit extended were outweighed by small decreases in seven of the other eight components. “Once again, the dismal housing market was cited by some respondents as the chief driver of weak performance,” North noted. One respondent stated that, “The housing market is very soft, creating less demand for building materials.” Another noted that, “Regional builders continue to suffer in the deflated housing market,” while a third cited the housing market as the reason its “profits are down.”

On a year-over-year basis, the combined index was unchanged at 57.2%, remaining well above the 50 level indicating economic expansion. The service sector fell 1.7%, perfectly offsetting the rise in the manufacturing sector of 1.7%. “Certainly part of the relative weakness in the service sector stems directly from the decaying housing market which has dramatically affected suppliers of building materials,” North said. “The manufacturing sector index, standing at a solid 58.3%, has been supported by an economy which continues to expand, albeit at a slowing pace.”

The CMI, a monthly survey of the business economy from the standpoint of commercial credit and collections, was launched in January 2003 to provide financial analysts with another strong economic indicator.

The CMI survey asks credit managers to rate favorable and unfavorable factors in their monthly business cycle. Favorable factors include sales, new credit applications, dollar collections and amount of credit extended. Unfavorable factors include rejections of credit applications, accounts placed for collections, dollar amounts of receivables beyond terms and filings for bankruptcies. A complete index including results from the manufacturing and service sectors, along with the methodology, is attached. A complete view of the index can be viewed online at .