CMI finally tops the 50-mark

by Wally Northway

Published: November 3,2009

COLUMBIA, Md. — The Credit Managers’ Index (CMI) has broken past the 50 neutral barrier for the first time in over a year, representing a growing economy. 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.

The National Association of Credit Management’s economic analyst Dr. Chris Kuehl said that there were two streams of good news, “Not only has there been some expansion in terms of credit availability, but there continues to be evidence that companies are catching up on their debt. Over the last few weeks, I have spoken at a several NACM events and have heard similar stories at each. 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, comments by attendees suggest that there is more money starting to filter into the system, making credit more accessible than it has been in some time.”

The CMI data show a significant improvement in dollar collections and that the amount of credit extended is higher than it has been in well over a year. There were also far fewer accounts placed for collection and fewer applications rejected. This latter point is important to note as one would expect more rejections in a much more restrictive credit environment. This means that many of the applicants are more creditworthy than they have been in past months.

Manufacturing Sector The manufacturing sector finally crested the 50 mark this month, a long-awaited development and one that is consistent with other economic data coming from the industrial community as a whole.

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