Credit Metrics Tick Higher in March
Investors may largely overlook this report, but the National Association of Credit Management’s Credit Managers’ Index (CMI) improved in March. Improvement was shown in most sectors, and the CMI favorable factors broke the 60 barrier for the first time since last July.
The combined total improved to 54.3 in March from 53.5 in February. All the favorable factors made gains of at least a point, with sales increasing the most to 59.2 in March from 56.8 in February.
The total moved to 50.6 in March from 50.1 in February. Rejections of credit applications fell one point to 51.2.
There were only two categories in the contraction zone: accounts placed for collection and dollar amount of customer deductions.
NACM Economist Chris Kuehl, Ph.D., said:
This strong reading coincides with some other national data points that have been trending in a better direction—everything from industrial production to durable goods orders to some of the most recent transportation indicators.
There was a similar gain in the unfavorable factors as far as combined scores are concerned and that is also good news as it indicates that companies are in less distress than was the case earlier.
It is evident from the unfavorable numbers that there was some damage done to some in the business community by the sluggish start to the year and that damage is still manifesting in the measures of financial distress such as collection and bankruptcies. Given the good numbers in the favorable categories this month, it is reasonable to expect better news next month in the unfavorable categories as well.