Credit Managers’ Index for August Looking Grim

Credit and financial professionals should not expect any sort of robust recovery in NACM’s Credit Managers’ Index (CMI) for August, which will be released Wednesday morning. Although likely to stay within the range of expansion (anything above 50) for months to come, the combined index appears hard-pressed to reverse its recent sluggishness.

Professionals will want to pay close attention to the favorable factors categories, which have been significantly outperforming their unfavorable counterparts for months. Particularly important will be the performance of sales and amount of credit extended categories, not in the sense of whether these will decline from July’s performance, but by how much. A collapse in sales would be consistent with other data, such as the Purchasing Managers’ Index, and be poorly timed for an already struggling retail community, said NACM Economist Chris Kuehl, Ph.D. He also highlighted the importance of amount of credit extended because it “reflects credit issuance to larger clients and customers, as they are the ones that will be seeking the most.”

Within the unfavorable factors, movement within the category of rejection of credit applications, particularly if a sizable increase, should not be overstated this month given the permeating climate of credit demand. “This is not unusual when there are slowdowns in the number of applications and a reduction in the overall amount of credit extended, as the only companies accessing credit are the good customers and the ones least likely to be turned down,” Kuehl noted.

- Brian Shappell, CBF, CICP, managing editor

For a full breakdown of the manufacturing and service sector data and graphics, view the complete August 2016 report Wednesday morning by clicking here. CMI archives may also be viewed on NACM’s website by clicking here.

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