News: NACM News

Credit Managers’ Index Rebounds

Wednesday, November 29, 2017  
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Following a dip in October, the Credit Managers’ Index bounced back in November. Data from the National Association of Credit Management (NACM) shows the overall index moving from 55.5 to 56.6 in November, a slight increase from the 56.5 reading two months ago.

“By and large, the Credit Managers’ Index this month is quite consistent with a variety of other economic measures, such as the Purchasing Managers’ Index, durable goods orders and capacity utilization numbers,” said NACM Economist Chris Kuehl, Ph.D. “There has been a sharp drop in demand for business loans in the last few months. That strikes many as odd given the kind of growth the U.S. has sported in that same period. It appears that many companies are self-financing their growth, as opposed to borrowing. That has implications for the credit industry as a whole.”

The index of favorable factors jumped from 63.8 to 65.7 – its highest reading in years. The unfavorable factors have been improving, but not at the same rapid pace. It moved from 50 to 50.4, marking 12 months at or above 50, the line between contraction and expansion.  

Diving into the favorable factor subcategories, sales jumped from 66.8 to 68.3, it’s strongest position since the start of the recession. New credit applications edged upward from 62.8 to 63.7. The dollar collections category jumped to its highest position since the recession, moving from 60.2 to 63.1. Amount of credit extended also increased from 65.5 to 67.8.

In the unfavorable subcategories, a few categories remain in the 40s, but most are showing improvement. Rejections of credit applications moved from 51.8 to 52.4. Accounts placed for collection returned to expansion territory, jumping from 49.5 to 50.5. The disputes remains in contraction, increasing slightly from 47.6 to 48.3. Dollar amount beyond terms also remains in contraction, inching from 47.3 to 47.5. The dollar amount of customer deductions also eased up from 48.7 to 48.9. The filings for bankruptcies declined slightly from 55.3 to 55.1.

“Once again, the real story is not the month-over-month performance of the CMI, but the major differences between readings for the favorable and unfavorable data,” Kuehl said. “If one looked at just one or the other, there would be radically different conclusions as far as the health of the overall economy.”

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