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Credit Managers’ Index Ends 2017 on a Down Note

Sunday, December 31, 2017  
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Ending a rollercoaster year, November’s bounce-back for the Credit Managers’ Index was followed by another drop in December. Data from the National Association of Credit Management (NACM) shows the overall index moving from 56.6 to 54.2.

“In November, the sense was that real progress was ahead and many people have been speaking of 2018 with great expectations,” said NACM Economist, Chris Kuehl, Ph.D. “It may yet work out that way. This month may be written off as an anomaly, but it may also signal that some of those weaknesses that had been warned about are manifesting.”

The index of favorable factors took a nosedive from 65.7 to 59.4, retreating from its highest reading in years. The unfavorable factors continued its upward trend, moving from 50.4 to 50.8.

Looking into the favorable factor subcategories, sales fell from 68.3 to 59.2, marking its lowest point since December 2016. New credit applications fell from 63.7 to 57.3. The dollar collections category slipped from 63.1 to 59.1. Amount of credit extended also declined from 67.8 to 61.8.

Movement in the unfavorable subcategories wasn’t nearly as dramatic. Rejections of credit applications retreated to 51.4 from November’s 52.4. Accounts placed for collection returned to sub-50 contraction territory, dropping from 50.5 to 49.8. The disputes category remains in contraction, increasing slightly from 48.3 to 49.7. Dollar amount beyond terms also remains in contraction, moving up from 47.5 to 49.3. The dollar amount of customer deductions also eased up from 48.9 to 49.7. The filings for bankruptcies declined slightly from 55.1 to 55.

“This was not a month to bring joy to the economy—that slide in the favorable factors will demand a lot of attention going forward,” Kuehl said. “It is hoped that this is not a harbinger of things to come.”

View the complete report and analysis from NACM.

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