Authorization

Silver Lining Surrounds December CMI

COLUMBIA, Md., Jan. 4, 2020 /PRNewswire-PRWeb/ --ACredit professionals across the U.S. ended 2019 on a bit of a positive note despite a blip in the latest Credit Managers' Index (CMI) from NACM. The December CMI combined index reading dropped to 54.6 from November's 55.5. "The really good news for an end-of-the-year report is the numbers have stayed quite consistent and in reasonably positive territory," said NACM Economist Chris Kuehl, Ph.D. "The reading this month was a little down from the month before, but compared to the big declines the Purchasing Managers' Index has been experiencing, the data remains very solid," he added.All four combined favorable factorsa??sales, new credit applications, dollar collections and amount of credit extendeda??declined in December, so the favorable index dipped from 61.6 to 59.3 month-to-month. Amount of credit extended was the only reading to remain in the 60s, where it's been the last three months and for much of 2019. The combined unfavorable factors remained the same in December as November at 51.5; however, the devil is in the details. All six factorsa??rejections of credit applications, accounts placed for collection, disputes, dollar amount beyond terms, dollar amount of customer deductions and filings for bankruptciesa??were all in expansion (a score of at least 50). "The most encouraging aspect of the unfavorable data this month is all the readings are in expansion territory for the first time in several years," Kuehl said. "The turnaround is not spectacular and it will not take much to see these numbers deteriorate again, but for now the data shows companies are in generally better shape as far as their trade credit is concerned. We will see what the data looks like after the first of the year when the retailers determine what those sales did to their profit expectations."The favorable factors in the manufacturing sector were a bit of a mixed bag as half went up and half went down. New credit applications and dollar collections each improved slightly in December, but that didn't stop the score from dropping to 58.9 from 59.7. All six unfavorables were in the expansion zone, including accounts placed for collection and disputes, which climbed above 50. Overall, manufacturing inched upward three-tenths of a point to 54.8 in December. "A bit of a mixed set of messages this month with a nice recovery in manufacturing, but some concerns regarding the fate of the retailer and how this will affect the service readings in the new year," said Kuehl.In the service sector, which declined from 56.5 to 54.4 in December, neither the favorables nor unfavorables showed much promise. The favorable readings all declined quite significantly, led by new credit applications falling from 62.6 to 57.6. Amount of credit extended also declined nearly four points. "The real concern here is that sales are up due to all the discounting and specials, but profits are not keeping pace with those revenues," Kuehl said. In the unfavorable categories, accounts placed for collection and dollar amount beyond terms slipped into contraction territory. Filings for bankruptcies was the lone category to improve in December. "The worry at this point is many retailers already look a little weaker than expected," Kuehl said, "That does not bode well for after the holidays. Construction seems to be picking up a little as far as residential activity is concerned, but labor shortage remains a huge issue."For a complete breakdown of the manufacturing and service sector data and graphics, view the December 2019 report at https://web.nacm.org/CMI/PDF/CMIcurrent.pdf. CMI archives may also be viewed on NACM's website at https://www.nacm.org/cmi/cmi-archive.
See also:
Leave a comment
News
  • Latest
  • Read
  • Commented
Calendar Content
«     2020    »
 12345
6789101112
13141516171819
20212223242526
2728293031