Credit Benchmark have released the June Credit Consensus Indicators (CCIs). The CCI is an index of forward-looking credit opinions for US, UK and EU Industrials based on the consensus views of over 20,000 credit analysts at 40+ of the world’s leading financial institutions.
Drawn from more than 950,000 contributed credit observations, the CCI tracks the total number of upgrades and downgrades made each month by credit analysts to chart the long-term trend in analyst sentiment for industrials. A monthly CCI score of 50 indicates neutral credit quality, with an equal number of upgrades and downgrades made over the course of a month. Scores above 50 indicate that credit quality is improving. Scores below 50 indicate that credit quality is deteriorating.
The positive trend continued in June for both EU and US Industrial firms. EU Industrials have been modestly improving in recent months, while US firms remain steady. UK Industrial firms are experiencing some instability, with alternating instances of improvement then deterioration, month-on-month.
UK Industrials: Another Hiccup
UK Industrial firms are struggling to remain in positive territory, with a return to net deterioration this month.
UK Industrial firms are experiencing some instability in their collective credit quality, with another reversal of last month’s net improvement.
The UK CCI score sat just under neutral this month, at 49.4. This drop comes after last month’s positive score of 52.2, which followed an earlier negative score.
This instability is unsurprising given British manufacturing activity was reported to expand last month at the weakest rate since January 2021; struggling to maintain momentum against rising costs of living.
EU Industrials: Continued Improvement
The improving trend for EU Industrial firms continues, with credit quality hitting another a peak not seen in recent months.
The EU CCI score is 53.7, which is the highest score since June 2021. The CCI has not been in negative territory since the subsequent CCI score drop in July 2021.
These good fortunes may be jeopardised by heightened supply chain crisis issues as a result of EU regulations limiting steel imports – potentially forcing manufacturers to relocate to Asia.
US Industrials: Steady but Modest
US Industrials are in the happy position of experiencing another month of net credit quality improvement.
Continuing a positive run, the US CCI sits at 52.6 this month. This is the 16th consecutive month showing a positive score. Scores have been modest across 2022, however.
US investment into local vehicle and semiconductor chip manufacturing will go some way to ease supply chain pressures which threaten to slow recent positive output figures.
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