Credit Managers’ Index Rebounds
Wednesday, November 28, 2018
The November Credit Managers’ Index rebounded slightly this month after dropping in October. Data from the National Association of Credit Management (NACM) shows the overall index moving to 55.8, up from 54.5 last month.
“The more pertinent data is showing some consistent concerns within the nonfavorable categories as well as some consistently good news within the favorable categories,” said NACM Economist Chris Kuehl, Ph.D. “The reason for this split in performance is that some sectors are doing very well (the oil and gas business, automotive and health care), but other sectors are consistently struggling (some retail, agriculture and aerospace).”
The index of favorable factors also rebounded, jumping from 61.6 to 63.2. Unfavorable factors also increased from 49.7 to 50.9 – its highest reading in the past 12 months.
Looking into the favorable factor subcategories, salesincreased from 62.7 to 64.5. New credit applications also improved, edging up from 61.7 to 62.2. The dollar collections category returned to the 60s, increasing from 57.5 to 60.9. Amount of credit extended moved up from 64.5 to 65.3.
“This reading [amount of credit extended] has been very high for the bulk of the year and suggests that the biggest and most important creditors are asking for more credit as they are likely to be the companies that have been growing most aggressively,” Kuehl said.
Three of six unfavorable subcategory numbers also showed some positive news. Rejections of credit applicationsheld steady at 51.4. Accounts placed for collectionremained in contraction, declining from 48.4 to 48.2. The disputescategory eased out of contraction, moving from 49.9 to 50.1. Dollar amount beyond termsjumped from 47.7 to 52.3. The dollar amount of customer deductionscategory held nearly steady, increasing slightly from 49.5 to 49.6. The filings for bankruptciesalso increased to 53.6, up from 52.1 in October.
Kuehl noted that the overall sense of the reading this month is there has been some progress, but nothing to suggest the pattern of ups and downs will be broken anytime soon. The other data coming out regarding the economy looks similar.
View the complete report and analysis from NACM.
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