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Credit Index Breaks Into Expansion Territory

ControlDesign.com
12/10/2009

The Credit Managers' Index (CMI), a monthly survey of credit professionals' business cycles, has broken past the neutral 50 barrier for the first time in more than a year, reported the National Assn. of Credit Management (NACM) in Columbia, Md. The index started in that direction in September, when the service side of the equation improved to 50.1, but manufacturing still lagged, finishing at 49.6. Now both sectors are showing expansion, and the CMI as a whole is pointing toward growth.

Dr. Chris Kuehl, economic analyst at the NACM (www.nacm.org) identified two streams of good news. "Not only has there been some expansion in credit availability, but there continues to be evidence that companies are catching up on their debt," said Kuehl. "Companies that had been behind in their obligations are catching up in anticipation of further growth and the need to ask for more credit in the future. By the same token, there is more money starting to filter into the system, making credit more accessible than it has been in some time."

The manufacturing sector finally crested the 50 mark in October, a long-awaited development and one that is consistent with other economic data coming from the industrial community as a whole. "After falling just short of the growth mark in September at 49.6, manufacturing numbers are now past the neutral zone and are standing at 51.2," said Kuehl. "This is a pretty sharp gain given the slow development over the past several months. While it took from July to September to move 1.3 points, it only took one month for the sector to move 1.6 points to reach October's numbers. This is rapid expansion by any measure."