News: NACM News

Credit Managers’ Index Zigzag Continues

Wednesday, March 27, 2019  
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After February’s rebound, the March Credit Managers’ Index declined again in March. Data from the National Association of Credit Management (NACM) shows the overall index dropping to 53.6 from 54.9 last month. Both the index of favorable factors and unfavorable factors decreased as well.


“This was one of those months where the scores reversed again,” said NACM Economist Chris Kuehl, Ph.D. “It is not a crisis situation by any stretch as the numbers are still firmly in the expansion zone (a score above 50), but we all would like to see improvement. The challenge is that much of the other economic data is telling the same story as there is a low expectation for first quarter GDP and reductions in the readings that are coming from the Purchasing Managers’ Index as well as data from industrial output to capacity utilization.” 


Looking at the favorable factor subcategories, sales plunged from 62.6 to 58.2 – its lowest reading in two years. New credit applications dropped from 58.9 to 57.8. The dollar collections slipped from 59.1 to 56.6 – its lowest point since last April. Amount of credit extended was the only favorable subcategory that continued to rise, moving from 62.3 to 63.5. 


Significant decreases also occurred in the unfavorable factor subcategories. Rejections of credit applications declined slightly from 52.1 to 51.2. Accounts placed for collection dropped significantly from 49 to 46.4. The disputes category was the only unfavorable subcategory to increase, inching up from 48.5 to 49.5. Dollar amount beyond terms dropped to the contraction line of 50 from February’s 51.3. The dollar amount of customer deductions category dropped below the contraction line to 48.8 from 50 last month. The filings for bankruptcies decreased from 54.7 to 53.7.


“There is no wholesale collapse under way, but the data trended down generally, and in some sectors the decline was significant—the worst reading in the last 12 months,” Kuehl said. “The hope is that next month trends back up, but with all the other generally down data coming out of late, that doesn’t seem likely.” 


View the complete report and analysis from NACM.


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