News: NACM News

Credit Managers’ Index Begins 2019 with a Dip

Wednesday, January 30, 2019  
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The January Credit Managers’ Index declined slightly this month from December 2018. Data from the National Association of Credit Management (NACM) shows the overall index moving to 53.4, down from 54.2 last month and the lowest overall reading in the past 12 months.


“The first sets of data coming in have shown there was good reason to be worried. The Purchasing Managers’ Index trended lower and so did the December CMI,” said NACM Economist Chris Kuehl, Ph.D. “Now that January is in, there was still more decline although nothing precipitous. The optimists are asserting this is just a ‘breather.’ They expect recovery in the second half of the year. The more pessimistic assert this will be just the start and conditions will steadily worsen through the year.” 


The index of favorable factors remained relatively stable, inching up slightly 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, sales increased slightly from 59 to 59.7. New credit applications improved, moving from 57.5 to 58.2. The dollar collections category dropped from 59.3 to 59. Amount of credit extended remained in the 60s but declined from 61.9 to 61.2. 


Recently, the decline in the CMI data was reflected primarily in the favorable categories, while the unfavorable stayed relatively stable. Now, there are some signs of real distress among creditors. 


Rejections of credit applications increased from 51.4 to 51.8, which is good news given the applications for credit category has been a little weak. Accounts placed for collection remained in contraction, declining from 49.7 to 48.2. The disputes category also dipped, from 49.6 to 47.1. Dollar amount beyond terms declined from 49.3 to 47.4. The dollar amount of customer deductions category also fell, moving from 49.7 to 48. The filings for bankruptcies also dropped but remained in contraction, sliding from 55 to 53.8.


“The message is loud and clear: Companies are having issues, and this has started to affect their ability to keep pace with their obligations,” said Kuehl. “There has been enough of a slowdown in some sectors to impact the data. The numbers are still in the high 40s and not all that far from expansion, but the trend is not in the preferred direction and is likely to get worse as the year progresses.” 


View the complete report and analysis from NACM.


NACM North Central members are encouraged to participate in the monthly CMI survey. Taking just five minutes to respond helps ensure the index remains a valuable tool for the association and your profession. Learn more.