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NACM’s Credit Managers’ Index: Steady as She Goes

September 05, 2017, 07:39 AM
Filed Under: Economic Commentary

According to the National Association of Credit Management, the Credit Managers' Index combined score for August came in at a slightly higher reading than last month, at 55.1.

“There has been some discernible improvement in the overall economy, but not enough to push activity for the credit managers,” said NACM Economist Chris Kuehl, Ph.D. “Steady state is good news as long as it has steadied at a relatively high rate and that seems to be the case these days.”

Strong performance in the index’s favorable factors and weak performance in the unfavorable has been a repeating pattern for months, and August is no different. Among the favorable, significant growth was seen in new credit applications. The amount of credit extended also saw improvement, suggesting that more money is being handed out to the larger debtor companies. However, data for dollar collections, a very volatile factor over the past several months, declined back to their level in May.

Another possible indicator of the expansion of credit to larger creditors was seen in the unfavorable factors, with improvement in the number of rejections of credit applications. Slow pays have been a concern for much of the past year and continued in August, with dollar amount beyond terms worsening.

“The bottom line is that there is stability but at a relatively low level,” Kuehl said. “The sense is that there will be growth in the third quarter as there has been in previous years, but there is still the expectation that this growth will fade in the fourth quarter.”

During the year so far, three months have seen readings above the current combined score and the rest have been below. In the manufacturing sector, the numbers indicate a stable environment, reflective of how they have been all year, with a high point in April. Favorable factors stayed in “very healthy territory,” the report states. Numbers in the service sector tend toward the high side for the year, though the overall score for the sector moved one-tenth of a point lower.

“Have we finally seen some stability in all this?” Kuehl said. “If so, the timing couldn’t be better, as we are fast approaching the most critical point in the year for consumers. It would be nice to carry some momentum into the holiday period.”

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