Credit Managers' Index for March Posts a Slight Decline to 54.2
The National Association of Credit Management's CMI for March 2013, although
declining slightly, shows a steadiness, but nothing to inspire confidence in
the economy. Government inactivity and budget cuts related to sequester are
the likely culprits.
COLUMBIA, Md., March 29, 2013 (GLOBE NEWSWIRE) -- via PRWEB - The March Credit
Managers' Index (CMI) from the National Association of Credit Management
(NACM) fell slightly from 54.9 to 54.2, with both favorable and unfavorable
factor indexes dipping by roughly equal amounts. Some individual showed
significant movement, but there was no clear signal from any of the factors as
far as financial stress is concerned, or anything to cause much confidence
Sales slipped from its position of 59.2 in February to 57.4 in March. This is
a fairly substantial decline of 1.8, but at 57.4, the index is as high as it
was in December. "The main concern is that for the last year, the sales
reading has been averaging in the low 60s and now there seems to be a struggle
to get there again," said NACM Economist Chris Kuehl, PhD. On the encouraging
side, the new credit applications number rose slightly (56.7 to 56.9). "A
significant desire to expand seems to exist, and businesses are starting to
more aggressively pursue credit," said Kuehl. "However, serious issues remain
in balancing the desire for more credit and creditworthiness." Dollar
collections also improved (57.5 to 57.7), and is continuing to trend in the
right direction, but amount of credit extended fell (62.5 to 61.6), suggesting
some return to caution on the part of trade creditors. The important point is
that this category remains above 60, which is a healthy sign, Kuehl noted.
Overall the index of favorable factors fell from 59 to 58.4. "It would be more
encouraging to see that positive trend reestablish, but the drop was not too
severe, and 58.4 is the lowest for this index since October of last year,"
said Kuehl. "It bears noting, however, that the favorable factor index was
mostly at 60 or above in the last year, and those stronger readings were all
taking place a year ago at this time." For the nine months from March-November
2012, the index was over 60 for six, and below for three. Since October 2012,
the index was above 60 only once.
There was a similar decline in the index of unfavorable factors, but not as
steep (52.2 to 51.4), putting the current reading roughly where it has been
for the last year. Volatility and variation in this index exist, but the range
has been narrow: a low point of 49.8 in July 2012 to a high point of 53.1 the
very next month. The variations within the index were a little more dramatic,
and all but one factor fell, with three slipping under 50, the point
separating contraction from expansion. Despite the increase in applications
for credit, or perhaps because of them, there was deterioration in rejections
of credit applications (52.3 to 51.9). Accounts placed for collection
reinforced an even bigger downward trend, falling from a respectable 51.8 to
49.7, marking its first time in contraction since July of last year. Disputes
showed renewed weakness in its slide (50.4 to 48.3), also marking the first
time this factor has fallen under 50 since last July. Dollar amount of
customer deductions also fell into contraction territory, but barely (50.7 to
49.9). Finally, filings for bankruptcy posted a significant loss (58.3 to
57.3), but is at least still showing solid growth. In contrast, dollar amount
beyond terms provided the bright spot, jumping into expansion territory when
it improved from 49.8 to 51.2. "The overall conclusion that can be reached by
looking at the unfavorable factor index data is that there are more companies
in distress than there were a month or two earlier, and that likely reflects
the consternation and confusion that has marked government inactivity the last
few months," said Kuehl.
"The CMI is telling roughly the same story as other economic indicators of
late. The latest durable goods order data showed an improvement if growth in
the aerospace sector is taken into consideration, but not if the sales that
Boeing posted last month are stripped out," said Kuehl. "Housing data has been
strong, but just this month there was a slight dip in the sales of existing
homes and in new home building."
"The statement made by this month's Credit Managers' Index was essentially
'steady as she goes,'" said Kuehl. "Nothing is suggesting a return to
recession, but neither is there a sure sign of an imminent breakout in the
manufacturing or service sectors."
The complete CMI report for March 2013 contains more commentary, complete with
tables and graphs. CMI archives may also be viewed on NACM's website.
About the National Association of Credit Management
NACM, headquartered in Columbia, Maryland, supports more than 15,000 business
credit and financial professionals worldwide with premier industry services,
tools and information. NACM and its network of affiliated associations are the
leading resource for credit and financial management information, education,
products and services designed to improve the management of business credit
and accounts receivable. NACM's collective voice has influenced federal
legislative policy results concerning commercial business and trade credit to
our nation's policy makers for more than 100 years, and continues to play an
active part in legislative issues pertaining to business credit and corporate
bankruptcy. Its annual Credit Congress is the largest gathering of credit
professionals in the world.
Source: National Association of Credit Management
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CONTACT: National Association of Credit Management
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