Magazine article Business Credit

Report for September 2014

Magazine article Business Credit

Report for September 2014

Article excerpt

The September CMI from the National Association of Credit Management fell to 54.9 from 56.7. While still firmly in the growth category, this is the lowest reading in nearly two years. This was not a good month and that brings a great many concerns to the forefront.

"This was not a small reversal of fortune by any stretch of the imagination," said NACM Economist Chris Kuehl, PhD. "This could be termed a collapse, and it begs a very important question. Which is correct: the Purchasing Managers' Index or the Credit Managers' Index?" In past years, it has been noted that the CMI tends to predict the pattern that will be seen in the PMI in the next month or two. "If that assessment continues to be accurate, the economy as a whole may be in for a very rude awakening," Kuehl said. "The numbers this month are almost shocking and there will be intense interest in what the index reports in the next iteration as this will determine whether this is the start of a depressing trend or just one of those anomalous months. The one factor that may provide some hope is that August and September are often difficult to get an accurate read on given the vagaries of the summer break and the return to school."

The index of favorable factors hung onto the 60s, but just by a hair with its fall from 63.8 to 60.9. One of the big declines was in sales, which fell from 64.8 to 60.9, a low going back to March. New credit applications went from 60.9 to 59.0. Though not a huge drop, it is now below 60 for the first time since May. Dollar collections went from 62.7 to 59.9, a more substantial drop out of the 60s. …

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