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NACM’s May 2021 Credit Managers’ Index Shines Light on Economic Recovery

June 01, 2021, 07:25 AM
Filed Under: Economy

The National Association of Credit Management’s Credit Managers’ Index for May remains firmly in expansion and a sign of continued economic recovery.

Month over month, the data changed very little from April to May. The combined score for the manufacturing and service sectors slipped just 0.8 points—about where it was in January, and the last time the combined numbers were in contraction territory was in May of 2020.

The combined Index of Favorable Factors remains robust despite a 1.5-point slip from April’s readings, and the combined Index of Unfavorable Factors only dropped 0.4 points month on month.

Among the favorable factors, three of the four categories had declines, ranging from 1.5 points (sales) to 3.1 points (dollar collections). Amount of credit extended remained the same month on month.

Within unfavorable factors, four of the six categories improved, ranging from 0.1 points (rejections of credit applications) to 2.4 points (disputes). Accounts placed for collection took the biggest hit with a 5.4-point drop, while fillings for bankruptcies at 59.3 had its best reading since January 2014.

“The shake-out in most of the business community seems to have taken place, and those companies that were severely weakened by the pandemic have met their fate and left the survivors to seek market share,” said NACM Economist Chris Kuehl, Ph.D.

“Manufacturing did better than expected during the recession,” Kuehl said. “The money that was poured into the economy ended up driving everything from appliances to cars and electronics. The sector has now started to feel the impact of the consumer shift back to services.

“The overall sense is that services are strongly rebounding, and that has been showing up in the retail sector as well as in hospitality, entertainment and travel,” Kuehl said. “There has been a subtle shift in terms of the economic drivers, and it has been reflected in the CMI data. The U.S. has been a service sector driven economy for many years, and that was interrupted by the pandemic and subsequent lockdown. The opportunity for the sector to resume operations has been reflected in some of the latest readings.”

For a complete breakdown of the manufacturing and service sector data and graphics, view the May 2021 report here.

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