February’s Credit Managers’ Index (CMI) shows no change overall from last month, mirroring the economy as a whole to some extent.
“There has been similar activity in some of the other indices that are watched carefully for trend signals,” said NACM Economist Chris Kuehl, Ph.D. “The Purchasing Managers’ Index is back down in the 40s and that is worrisome; but at the same time, there has been a gain in the New Orders Index and that suggests that future readings could be stronger.”
With a slight improvement from 58.2 to 58.6 in the index of favorable factors and a less encouraging trend in the unfavorable categories (50.3 to 50.1), the total combined score was 53.5, the same as January. All four favorable sub-categories showed increases with sales leading the pack (55.8 to 56.8) and dollar collections coming in second at 58.3 up from 57.8.
In the combined unfavorable categories, four of the six factors, the same ones as last month, remain in the contraction zone (below 50). Disputes showed the only gain, from 48.6 to 49.7, while rejections of credit applications and dollar amount of customer deductions remained unchanged at 52.2 and 49.5, respectively.
“The good news is that there is a marked difference in the performance of the favorable factors as all of them are in expansion territory and one of the readings [amount of credit extended] is above 60,” explained Kuehl. “The decline of the unfavorable numbers suggests more and more companies are facing struggles to keep current on their debt. Thus far, the challenges are not unexpected, with the companies engaged in the oil sector having the hardest time of it.”
- NACM staff