March CMI Disappoints, but ‘There’s No Need to Panic’

Share Article

Credit professionals are reporting a dip in the March 2018 economic report from the National Association of Credit Management, following impressive gains at the beginning of the year.

The good news is that the numbers are respectable and even robust when looking just at the favorable factors.

NACM’s March Credit Managers’ Index (CMI) might not have produced the positive results everyone wanted, but NACM Economist Chris Kuehl, Ph.D., says the minor decline from February’s scores is no cause for alarm. Instead, he said, it’s an indication that certain expectations simply weren’t met.

The CMI kicked off 2018 with a modest gain over December’s second-lowest reading of the year by reaching just above the mid-50 mark, pushing forward to its second-highest, yearlong reading of 56.5 in February. This month, the CMI’s combined score for the manufacturing and service sectors dropped slightly to 55.6.

Although February’s results were still too early to classify the year’s earlier gains as a “positive trend,” Kuehl previously expressed optimism for at least the first six months of 2018 in what he explained as a “two-phase year.” His predictions foresaw benefits to credit managers thanks to the tax legislation and more spending money through June, followed by spurred inflation from the Federal Reserve. In his latest analysis for March, Kuehl said the expectations of the tax reform weren’t met.

“It is starting to look like a bit of a dud. That was the concern from the start, as it was coming so late in the game,” he said. “At this point, it doesn’t appear to have had that much of an impact, but there may be an upside to this. Without that surge in growth, there has been less threat of breakout inflation and the pressure on the Fed to hike interest rates.”

The more noticeable declines in March were shown in the combined score’s favorable factors, where sales and dollar collections fell from the high-60s and low-60s, respectively, to the mid-60s (64.1) and high-50s (59.6). Half of the unfavorable factors remained in contraction territory (a score under 50); however, Kuehl said large customers are still receiving plenty of credit, as the amount of credit extended stayed in the high 60s.

The manufacturing sector was hit a bit more than the service sector—the former fell from 56.2 to 55.2 due to drops in all four favorable factors. Readings for sales (62.5), new credit applications (62.4) and dollar collections (59.5) changed by about three points, while changes to the amount of credit extended were limited. Despite remaining just above contraction territory—as seen in February—increases were reported in rejections of credit applications, accounts placed for collection and dollar amount of customer deductions.

“The thinking behind the tax cuts and other measures was that producers would be providing their own demand, as this move has been a return of supply-side economic theory,” Kuehl said. “It has not panned out, but time will tell.”

In the service sector, the reading fell less than one point from 56.8 in February to 56.1 in March. Both favorable (63.9) and unfavorable factors (50.8) were minimally impacted. New credit application numbers and the amount of credit extended improved over last month, but not enough to account for the decline in sales and dollar collections. The unfavorables had the most increases in credit application rejections as well as slight gains in accounts placed for collection, dollar amount of customer dedications and bankruptcy filings.

Since 2014, a look back at the CMI showed March improving over February, except last year when Kuehl noted a decline which he attributed to a “dampening enthusiasm” from legislative setbacks. Over the past four years, gains were reported in the CMI from March to April except for 2016—substantial increases that have Kuehl crossing his fingers in the coming month, following “rollercoaster performances.”

“The good news is that the numbers are respectable and even robust when looking just at the favorable factors,” Kuehl said. “There are reasons for caution, but few reasons for any sort of panic. It has been more a matter of disappointment that things are not better than this after all the changes at the start of the year.”

For a complete breakdown of the manufacturing and service sector data and graphics, view the March 2018 report at CMI archives may also be viewed on NACM’s website at


NACM, headquartered in Columbia, MD, supports approximately 13,000 business credit and financial professionals worldwide with premier industry services CMI Report for March 2018 , tools and information. NACM and its network of affiliated associations are the leading resource for credit and financial management information, education, products and services designed to improve the management of business credit and accounts receivable. NACM’s collective voice has influenced federal legislative policy results concerning commercial business and trade credit to our nation’s policy makers for more than 100 years, and continues to play an active part in legislative issues pertaining to business credit and corporate bankruptcy. NACM's annual Credit Congress & Exposition CMI Report for March 2018 conference is the largest gathering of credit professionals in the world.

Michael Miller
Andrew Michaels

Website: CMI Report for March 2018

Source: National Association of Credit Management

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Michael Miller
+1 (410) 740-5560
Email >
since: 07/2009
Follow >