NACM Sees Improvement

July 13, 2009
The CMI data suggest that the economy finally reached its lowest point and has been in the recovery stage

The Credit Managers’ Index (CMI) again showed upward movement in May. It began to climb in February, and now has carried gains forward in four consecutive months, according to the National Assn. of Credit Management (

The latest CMI combined index rose from 44.3 to 45.4, which equals levels not seen since October 2008 when the overall economy began its major slide. “The recession essentially came to an end in February and March of 2009,” says Chris Kuehl, Ph.D., NACM economist. “The CMI data, combined with various other measures, suggest that the economy finally reached its lowest point and has been in the recovery stage since.”

Kuehl says this doesn’t mean the economy will come roaring back in the next few months but predicts the second quarter will be the last quarter of negative GDP as the third quarter should show some growth.

A great deal of regional and sector variation, which mirrors the performance of the U.S. economy as a whole, still exists. The states that have seen the highest rates of job loss and bankruptcy—California, Florida, Michigan and Ohio—are seeing the weakest performance in terms of credit. However, some states seeing severe declines—most notably Arizona and Nevada—have shown some improvement.

The manufacturing sector continues to improve slowly, according to NACM. The most improvement tended to show up in the reduction of unfavorable factors, as favorable indicators basically were unchanged from the previous month’s data. By most accounts the manufacturing sector is just now showing some positive movement, and it is possible that credit activity in the sector might have provided some advance warning.

In the months to come, more aggressive growth in the manufacturing sector will be likely as other data suggest that capital expenditures in the manufacturing arena are growing. And although the number of bankruptcies has increased over the past several months, the pace has slowed, according to NACM.