Credit Managers’ Index Continues Upward
Tuesday, February 27, 2018
For the second consecutive month, the Credit Managers’ Index increased in February. Data from the National Association of Credit Management (NACM) shows the overall index moving from 55.1 to 56.5.
“To be honest, two good months in a row hardly constitutes a trend, but it has been many months in a row for all this up and down gyration,” said NACM Economist Chris Kuehl, Ph.D. “It is gratifying to see two consecutive months of solid performance.”
The index of favorable factors climbed significantly, leaping from 61.4 to 64.9. The unfavorable factors inched up slightly from 50.8 to 50.9.
Looking into the favorable factor subcategories, sales jumped from 63 to 66.8, its highest point since last September. New credit applications also increased significantly from 59.8 to 63.3. The dollar collections category zoomed upward from 58.7 to 62.9. Amount of credit extended also continued its climb, moving from 64.3 to 66.4.
The unfavorable subcategory readings weren’t quite as impressive, but there were a couple signs of improvement.
“The bottom line here is that there are still lots of companies that are struggling and have not yet participated in the recovery that has been driving the economy as a whole,” said Kuehl. “As a matter of fact, there is some additional risk these days as competitors feeling that growth start to push everyone to keep pace—some will simply not be able to keep up.”
Rejections of credit applications dipped slightly from 51.8 to 51.5. Accounts placed for collection dipped from 51.7 back into contraction territory at 49.8. The disputes category remained in contraction, holding steady at 49.6. Dollar amount beyond terms showed improvement, climbing from 47 to 48.9. The dollar amount of customer deductions category declined from 49.7 to 49.1. The filings for bankruptcies edged up from 55.2 to 55.4.
“This was a good month and it came on top of a good month. Is that enough to qualify as a trend?” Kuehl asked. “Probably not yet, but one has to start somewhere. If there are decent readings in the next month or two, we will have an actual recovery to talk about.”
View the complete report and analysis from NACM.
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