Credit Managers’ Index Rebounds
Wednesday, February 27, 2019
The February Credit Managers’ Index showed positive gains, following a decline in January. Data from the National Association of Credit Management (NACM) shows the overall index moving to 54.9, up from 53.4 last month. Both the index of favorable factors and unfavorable factors increased as well.
“There is some evidence to support both optimism and pessimism,” said NACM Economist Chris Kuehl, Ph.D. “As a matter of fact, these contradictory indications have become quite the topic among economists. The Purchasing Managers’ Index tumbled dramatically at the end of the year but then bounced back in February. There were similar performances seen in everything from capacity utilization to capital expenditures, durable goods orders and other markers of the economy. The worrisome part shows up with higher commodity prices and the impact of a global economic slowdown. This month’s CMI follows some of that same pattern.”
Looking into the favorable factor subcategories, sales increased from 59.7 to 62.6. New credit applications remained in the 50s but improved, moving from 58.2 to 58.9. The dollar collections category stayed relatively stable, moving from 59 to 59.1. Amount of credit extended rose from 61.2 to 62.3.
Significant movement also occurred in the unfavorable factor subcategories. Rejections of credit applications increased from 51.8 to 52.1, its highest point since August 2018. Accounts placed for collection remained in contraction, increasing from 48.2 to 49. The disputes category also inched up, from 47.1 to 48.4. Dollar amount beyond terms escaped the sub-50 contraction zone, jumping from 47.4 to 51.3. The dollar amount of customer deductions category also jumped, moving from 48 to 50. The filings for bankruptcies also improved but remained in contraction, rising from 53.8 to 54.9.
“It is not that the concerns voiced at the start of the year are not valid – there is plenty to worry about as far as inflation is concerned and the issues of a trade and tariff war will be biting sooner than later,” Kuehl said. “What this does seem to show is continued resilience in many businesses, and that would suggest they could survive a bit of downturn this year.”
View the complete report and analysis from NACM.
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