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NACM’s Credit Managers’ Index Shows Optimistic Outlook

August 03, 2015, 07:23 AM
Filed Under: Economy

The July report of the Credit Managers’ Index (CMI) from the National Association of Credit Management (NACM) reflected a positive recovery to 56—higher than any monthly reading since last October.

“Think about that for a moment—[that’s] as high as it was when the GDP numbers for the country were trending at close to 5% growth,” said NACM Economist Chris Kuehl, Ph.D. “This is a pretty stunning turnaround.”

The driving force behind the combined index’s higher reading comes from the index of favorable factors, which improved from 59.6 in June to 63.5 in July. The combined sales category, however, showed the most impressive gain, jumping from 56.6 to 65.1. Durable goods orders as well as the Purchasing Mangers’ Index have seen similar upward movements, Kuehl added.

For the first time since last year, all four of the favorable categories were above 60, reflecting a sign of impending growth. The index of unfavorable categories showed improvement as well with a combined reading of 51 in July, up from 49.2 in June—these gains though are not as impressive as the index of favorable factors. However, while three of the six unfavorable factors remain under the contraction zone, any sign of improvement within these categories is positive, Kuehl said.

“This is a solid trend and one that everybody hopes will continue into the remaining months of the year,” Kuehl advised. “One cautionary note is to look at July and August of last year as they were strong and were followed by a dip.”

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