Credit Managers’ Index Yo-Yo Trend Continues
Thursday, June 29, 2017
Following a significant drop In May, the Credit Managers’ Index (CMI) from the National Association of Credit Management (NACM) rebounded in June, continuing a familiar up-and-down trend for the index. The overall index stands at 56.1, compared to 53.6 last month. June’s mark is the best in more than a year.
“The variability would be more problematic were it not for the fact that this behavior has been mirrored in all kinds of other data streams,” said NACM Economist Chris Kuehl, Ph.D. “The fact is that there are contradictory waves coursing through the economy as the wild enthusiasm that greeted the start of the year has come face to face with reality. As with the data over the last few months, the majority of the shift this month was due to the same two categories: dollar collections and accounts beyond terms.”
The index of favorable factors also jumped from 60 in May to 63.9, and the index of unfavorable factors returned from the sub-50 contraction zone, moving from 49.3 to 50.9.
The favorable subcategories all saw gains. Sales soared from 60.6 to 66.5, its best reading in several years. New credit applications increased slightly from 59.3 to 59.8. The dollar collections category showed the most significant movement, jumping from 56.7 to 62.5. There was also significant improvement in the amount of credit extended, as it went from 63.6 to 66.8.
Movement in the unfavorable subcategories was also positive but much more subtle. Rejections of credit applications edged slightly higher from 52.4 to 52.6. Accounts placed for collection remained in contraction, rising from 48.5 to 49.3. The disputes reading climbed out of contraction, jumping from 47.9 to 50.4. Dollar amount beyond terms made the biggest move, rebounding from last month’s drop to 45.9 to 50.4 this month. The dollar amount of customer deductions eased up as well, going from 48.7 to 49.1. The filings for bankruptcies category moved from 52.7 to 53.4.
“This is yet another month that reverses course from the month prior, but it is hoped this back and forth ends, as nobody wants the stability to develop due to a downturn,” Kuehl said.
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