CMI moves in positive direction
by Wally Northway
Published: February 2,2010
COLUMBIA, Md. — The latest data is starting to turn in a decidedly positive direction; GDP numbers are the best in over a year and a half, suggesting that the recession is in clear retreat. After a mild recovery in the third quarter, numbers jumped 5.8 percent in the fourth. The bulk of this growth is attributed to manufacturers starting to replenish inventories, mostly since the beginning of December.
This shift in strategy is reflected in the Credit Managers’ Index (CMI) numbers, as well. “The jump in manufacturing was stark and unexpected and, since the decline registered in the last iteration of the index, there has been a major leap in some critical areas,” said Chris Kuehl, Ph.D., economist for the National Association of Credit Management (NACM). “The combined CMI saw a jump from 52.9 to 55.1, which is impressive enough, but the real movement came from the manufacturing side.”
Reinforcing the message coming from the economy as a whole, the manufacturing sector jumped from 52.1 to 55.1, reversing the trend from the December index when the sector stagnated and slipped in terms of positive factors.
There was an improved atmosphere in both manufacturing and service sectors resulting with the most activity in the combined index’s favorable factors, specifically sales and new credit applications. Sales in the combined index jumped from 56.7 to 60.7, marking the first time this figure has been above 60 in 18 months. There was also progress in new credit applications—a jump from 54.2 to 57—signaling movement in the credit sector despite ongoing issues in the financial community. One of the biggest leaps came from dollar collections, which sported readings in the 40s just nine months ago and is now at 61.3. The same pattern can be seen in amount of credit extended, now standing at 58.8 after sitting in the 40s just five months ago.
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