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CMI still rising

COLUMBIA, MD. — The latest Credit Managers’ Index (CMI) is holding steady and showing stability in the credit sector.

“The data has not yet been enough to push past the point of contraction to expansion, but it is getting ever closer to that point, suggesting that expansion is only a month or two away,” said Dr. Chris Kuehl, the National Association of Credit Management’s (NACM’s) economic analyst.

The CMI has now risen for five months in a row (starting with the February rebound). The latest CMI combined index rose from 45.4 to 46.6. This is still short of the 50-line that separates contraction from expansion, but it is drifting ever closer. The data reinforces the sense that has been dominating most economic analysis for the past few months.

The biggest gains came from the favorable factors. Sales and new credit applications are both up dramatically, there has been a significant increase in credit granted and dollar collections are up. In unfavorable factors, there were fewer bankruptcies and fewer disputes. These are all signs of business returning to some semblance of normal activity.

The manufacturing sector showed the most dramatic gains this month. Since the first of the year, the name of the game in manufacturing has been inventory reduction, and these levels have fallen to nearly 20-year lows in many cases. The NACM said this was a painful financial adjustment, but it has set up the sector for a solid rebound as any demand that develops at this point will prompt new production. That can be seen in the CMI data as sales took a big leap forward this month. That trend should continue into the summer as retailers start to consider what they will need later in the year.

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