NACM's Credit Managers' Index for August Improves

Statistics for the latest Credit Managers’ Index (CMI) for August, which will be unveiled at Friday afternoon, point to a return to the growth patterns of earlier this summer.

Numbers will show a significant bump in the overall index. Look for particular strength in the sales and dollar collections categories as favorable factors are showing improvement not seen in a couple of years.

However, there are also unfavorable trends to watch, such as slow progress in categories like rejections of credit applications. NACM Economist Chris Kuehl, PhD suggested that “troubled companies are trying to access credit in the hopes they will see a turnaround sooner than later.” That’s not to say there wasn’t improvement, just that it remains lackluster.

Among the rest of the unfavorable factors, disputes moved slightly closer to the 50s, while dollar amount beyond terms made a solid leap. “This is a good sign and means that companies seeking additional credit are now moving to catch up on current debt,” said Kuehl. “This action has been a precursor to growth in the past.”

Manufacturing’s rebound appears to be tracking hotter than that of the service sector in the August index, though such a situation isn't surprising considering the time of year. Either way, service categories are still importantly trending in the right direction.

“The fact is the service sector still drives the bulk of economic growth in the United States, and it certainly drives hiring. If there is still trouble in this sector, the overall pace of economic growth will be slower than preferred. It is good news to see the trend that started in May start a recovery in August,” said Kuehl.


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