Credit Managers’ Index Begins 2018 on the Upswing
Wednesday, January 31, 2018
Following a drop in December, the Credit Managers’ Index rebounded to start 2018, fueled by climbing sales, new credit applications and the amount of credit trade creditors extended to their customers. Data from the National Association of Credit Management (NACM) shows the overall index moving from 54.2 to 55.1.
“January was a rebound month, but not an especially strong one, and it would be premature to assert that an upward trend may be in the offing,” said NACM Economist, Chris Kuehl, Ph.D. “The tax cuts will show up in the data for the next several months, but as the burst is accommodated, there will be more long-term concern centered on inflation.”
The index of favorable factors began to climb back from its December nosedive, climbing from 59.4 to 61.4. The unfavorable factors held steady at 50.8.
Looking into the favorable factor subcategories, sales rose from its lowest point in a year, 59.2, to 63. New credit applications increased from 57.3 to 59.8. The dollar collections category continued to slip, moving from 59.1 to 58.7. Amount of credit extended recovered from its previous drop, moving from 61.8 to 64.3.
Most movement in the unfavorable subcategories wasn’t nearly as dramatic. Rejections of credit applications rose from 51.4 to 51.8. Accounts placed for collection climbed from sub-50 contraction territory, rising from 49.8 to 51.7. The disputes category declined slightly from 49.7 to 49.6. Dollar amount beyond terms retreated from 49.3 to 47. The dollar amount of customer deductions category remained steady at 49.7. The filings for bankruptcies edged up from 55 to 55.2.
“Another episode in the roller coaster world of the credit manager,” said Kuehl. “Last month, there was a decided drop and this month a recovery back to numbers that were typical of November. It looks like the up and down will be with us for a while.”
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