CMI Reports Growth for Third Consecutive Month

The seasonally adjusted Credit Managers’ Index rose another 1.3 percent in April after rising by 2.5 percent in February and 0.5 percent in March.
This marks the third month in a row for growth after six months of contraction.
“There had been concern that the April numbers might have been lower, but they came closer to matching the more robust pace in February,” said NACM Economist Chris Kuehl, Ph.D.
The increase matches with data coming from other sources, most notably, the increase in consumer confidence seen in several national surveys, he said. As in past reports, there are still a number of components in the combined index still below the 50 level, but more of them are trending in a positive direction. Sales have continued to rise as have new credit applications, dollar collections and the amount of credit extended.
“All in all, the index of favorable factors increased quite substantially from 43.1 to 44.8, marking the highest reading since November 2008 when the real economic collapse began to manifest itself,” said Kuehl. “There are no index values above 50 as of yet, so are all still in the contraction zone, but the trending is in the right direction.” The unfavorable factors did not show as much positive change, but there was also some movement in the right direction—fewer bankruptcies and a reduced dollar amount of customer deductions. The other factors remained fundamentally the same as in March and some tracked a bit more negatively, especially disputes.
This marks the third month of positive data in a row from the CMI and that has tended to presage some of the positive data that is just starting to develop in other surveys. Kuehl pointed out that conditions have started to improve in select parts of the economy and faster than had been originally indicated by many economists. “The consumer is more confident than expected, the markets came off the bear market in March to score a healthy April and there have been no surprises in the banking sector for a while. It would suggest that the recession began to reach its lows in March and this is also what the CMI would suggest,” he said. The CMI has consistently been a harbinger of economic conditions in the country and this latest data supports the notion that conditions have started to stabilize. It will not be a cause for real celebration until the CMI climbs back above 50. However, the tracking supports this for the not-too-distant future.

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