The National Association of Credit Management's (NACM) economic report for November 2012 regained the loss experienced in October, showing a return to form in key factors.
Columbia, Maryland: November 30, 2012—The Credit Managers' Index (CMI) reading of 55.2 for November is still shy of the high points reached back in February and March (55.8 and 56.2, respectively), but is back to the levels seen in August and September. When the reading from October fell to 54.4, there was a sense that it may have been an anomaly, and not as dangerous as it would appear. Now that assessment looks more accurate.
The most important jump was in sales, which climbed from 57.4 to 60.4. It is always encouraging to see the data cresting past 60, and this marks the best sales month since August when the reading was at 62. However, the best improvement in the favorable factors was in dollar collections, as it improved from 54.6 to 61.3. "That is an impressive showing by any measure, and suggests that companies are seeing enough improvement in revenues to start catching up on their debt," said Chris Kuehl, PhD, economist for the National Association of Credit Management (NACM), who added that the full-point improvement in amount of credit extended signals more demand from reliable customers than in the past few months. This is a noted pattern, he said. "As companies begin to get current on their credit, they are often motivated by the need to ask for more credit for expansion. First they catch up and then they ask for more credit and that appears to be happening again." The only favorable factor that weakened was new credit applications, which fell from 56.6 to 56.5.