Daily News: September 3, 2013

NACM: Credit Managers’ Index ‘Bodes Well For Coming Months’

The National Association of Credit Management (NACM) said its Credit Managers’ Index (CMI) report for August 2013 “bodes well for the coming months, with sales and collections performing strongly. The trend of the last four months is now clearly positive, with only July bucking growth.”

The NACM added that the CMI for August returned to the growth patterns of earlier this summer, noting that the numbers look impressive again, and the index sits at 56.4, up nearly a full point from July’s 55.5. The last few months were a little volatile, but not unexpected, the NACM said.

The group noted that the surge that kicked off the summer was based primarily on expectations, but as Q2 came to an end there was some fear that business anticipated too much, too fast. The big jump from the April index’s 53.3 to May’s 55.6 was followed by a couple of months that didn’t carry the momentum forward significantly. The NACM said July looks like a month that gave businesses a chance to regroup and consider what the rest of the year would really look like, as the August numbers are the best in over 18 months and higher than the previous peak in June.

Some important trends showed up in the unfavorable factors index as well. The gain noted in new credit applications, a favorable factor, was somewhat tempered by the lack of progress in rejections of credit applications, which retreated from 53.2 in July to 52.7 in August, the organization pointed out.

“This suggests that some troubled companies are trying to access credit in the hopes they will see a turnaround sooner than later,” said NACM economist Chris Kuehl, PhD. There was also some decline in accounts placed for collection, from 53.6 to 52.5, again suggesting some companies are struggling this summer. “As noted in last month’s report, a pattern is developing that will test weaker companies. As major competitors make their move, the others in that sector will struggle to hang onto their market share, and some will be better prepared than others,” he said.

To read NACM’s full CMI report click here.