NACM's September Credit Managers' Index Edges Upward Slightly
NACM's Credit Managers' Index (CMI) gained 0.6 points in September to a reading of 55.6, but respondents use an urgent tone when describing business conditions. The CMI is still on the side of economic expansion at this time from a number standpoint.
COLUMBIA, Md., Sept. 30, 2022 /PRNewswire-PRWeb/ -- NACM's Credit Managers' Index (CMI) gained 0.6 points in September to a reading of 55.6, with improvements in favorable factor indexes offsetting deterioration in unfavorable factor indexes. Respondents continue to note that supply constraints and logistics issues are problematic—affecting payment times and increasing customer dissatisfaction. Many respondents also indicated more issues with collections and one respondent indicated that several clients were advising of financial distress relating to cashflow and inflation pressures.
"The CMI came in a bit stronger this month, up six-tenths of a point, but the comments from survey respondents have a more urgent tone regarding business conditions and worry that the economic tide is turning, even with marked improvements in some factors" said NACM Economist Amy Crews Cutts, Ph.D., CBE®. "The data and the commentary seem to be in opposition, but they are in alignment. For example, sales, which are measured in dollars, are rising in value due to higher prices while the number of units sold is steady or falling for most of our respondents. Similarly, collections are up this month, but it is taking much more effort on the part of credit managers to get payments ... The CMI is still on the side of economic expansion at this time from a number's standpoint, aligning with the healthy employment report that we had in August."
The index of favorable factors improved 1.7 points in September to 63.8, a level that is 1.0 points lower than a year ago. The index of unfavorable factors fell by 0.1 points, but with rounding remained level at 50.2 points, 1.7 points lower than a year ago.
Three of the four categories in the favorable factors list increased the September survey, reversing their trends from the August survey. The dollar collections index led the rise with a sharp 5.6-point gain to 63.3, its best reading since May 2022. The sales index improved for the first time in six months, adding 1.2 points to 64.2.
All but two of the unfavorable factor indexes for the combined CMI deteriorated in the September survey. The index for dollar amount beyond terms improved 2.3 points to 48.7, which being below 50 still indicates that more respondents are seeing late payments than are being paid on time. The filings for bankruptcies index deteriorated the most, falling 4.1 points to 53.5, reversing all the gain recorded in the August survey. The disputes index lost 1.0 points, to come in at 48.2, its twelfth consecutive month below 50.
"There is significant volatility in the CMI sector indexes at the moment, with the longer term trend being toward a weaker economy in both sectors," Cutts said. "Neither is suggesting that we are in or near recession at the moment. However, over the past month interest rates have shot up. For example, mortgage rates have jumped from about 5.5% to over 6.75% since the end of August and are up more than three full percentage points since the start of the year. This is having a chilling effect on home sales, mortgage originations and home building, all major contributors to our economy. All businesses are paying significantly more for credit now, as well as for their labor and materials. This situation is not likely sustainable for long as noted by our respondent's comments."
For a complete breakdown of the manufacturing and service sector data and graphics, view the September 2022 report at https://nacm.org/download-cmi.html. CMI archives may also be viewed on NACM's website at http://www.nacm.org/cmi/cmi-archive.
ABOUT THE NATIONAL ASSOCIATION OF CREDIT MANAGEMENT
NACM, headquartered in Columbia, Maryland, supports approximately 11,000 business credit and financial professionals worldwide with premier industry, 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 conference is the largest gathering of credit professionals in the world.
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