Report for April 2012.
The decline in the CMI is consistent with other data released in recent weeks. The numbers are not suggesting an imminent crisis, and nothing that approaches the return to recession being seen in Europe. However, the decline indicates that the robust growth that started the year has faded somewhat, provoking concerns the economy will start to retreat for the third time in as many years.
The index of favorable factors fell from 62.5 to 60.5. Sales had the biggest change, falling to 60, a level not seen since November 2011 when it stood at 58.3. "A drop of 4.1 points is not insignificant and that is taking place at a time when the retail numbers have been adequate in the country as a whole" said NACM Economist Chris Kuehl, PhD. "The slide in sales tends to coincide with what has been reported as far as durable goods orders are concerned." Favorable factors declined almost across the board, including dollar collections, which fell from 61.4 to 59.3. New credit applications also slipped from 60.4 to 58.2, but there was some good news in the amount of credit extended, which rose from 63.9 to 64.6. At first blush, it seems businesses are cautious and not requesting as much credit, but those that are have been met with a willingness to extend.
The index of unfavorable factors fell as well, from 52 to 51.6, but the drop was not quite as dramatic as with favorable factors. The biggest decline was in dollar amount of customer deductions, which dropped from 51.1 to 50.4. Other categories improved, though. Rejections of credit applications rose from 50.6 to 51.6, reinforcing the notion that creditworthy companies are still accessing credit. By and large, there was not all that much movement in unfavorable factors. "The good news is that all the readings are still above the 50 mark denoting expansion, but the bad news is that there are several factors with readings between 50 and 50.7," said Kuehl. "It is a very fragile situation and it will not take much to push these numbers into contraction territory."
The online CMI report for April 2012 contains the full commentary, complete with tables and graphs. CMI archives may also be viewed online. Simply click on Credit Managers' Index in the Resources and Tools section of the NACM home page at www.nacm.org. Are you a credit professional? While you're there, sign up for monthly reminders to take part in the survey.
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|Title Annotation:||CREDIT MANAGERS' INDEX|
|Date:||Jun 1, 2012|
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