NACM: Credit Managers’ Index Steady for Fifth Straight Month
According to the August report of the Credit Managers’ Index (CMI) from the National Association of Credit Management, there was no change from July’s 56.8. This marks five months of readings between 56 and 56.8 and given the volatility in the economy as a whole for this period, this stability in credit is a positive signal as far as the rest of the year is concerned.
“The August CMI reflects a more optimistic future, but not an economy that is likely to surge,” said NACM Economist Chris Kuehl, PhD. “In comparing this month’s reading to that reported by the Federal Reserve, it is easier to understand the optimism about the last half of the year, as well as the worry about the impact of inflation fueled by some of this growth.”
Nearly all the index’s readings reflect that same stability, though there was noteworthy movement in both the favorable and unfavorable factor indices. Kuehl noted the same stability in various important data streams–capacity utilization between 78% and 79.7% over this period–just a little shy of what is considered normal.
Stability also appears in terms of capital expenditure. “These measures stand in stark contrast to the wild gyrations in the overall growth rate as first quarter numbers were in recession territory at -2.1%, while the second quarter boasted a gain of over 4%,” Kuehl said.
The favorable factor index improved only very slightly from 63.7 to 63.8. Sales dipped from 65.2 to 64.8, but that is still trending toward the high side as far as the last several months are concerned.
The unfavorable factor index was similarly unchanged from last month, but falling instead of rising from 52.2 to 52.1. This consistency suggests that none of the economic concerns that started the year have been sufficiently serious to drag the economy down. Just as with the favorable readings, there was more movement within the individual factors.
Finally, filings for bankruptcies slipped, barely, from 57.6 to 57.5. “The good news is that the financial distress at the start of the year has not triggered a wave of business failure, and now that seems even less likely,” Kuehl said.
To view the complete August 2014 report, click here.