Credit index continues its 10-month decline

The Credit Manager’s Index for January continued to show healthy economic conditions, despite another drop in the total index score.
The January reading for the index, compiled by the National Association of Credit Managers, was 52.7. That’s down 15.8 percent from its April reading of 62.6.
A reading greater than 50 in the index indicates that the economy is expanding, while readings less than 50 indicate an economy in decline.
The index is grouped by favorable factors – sales, new credit applications, dollar collections and amount of credit extended and unfavorable factors – rejections of credit applications, accounts placed for collections, disputes, dollar amount of receivables beyond terms, dollar amount of customer deductions and bankruptcy filings.
Favorable factors continued their steady decline, dropping from 58.1 in December to 53.4 in January. Unfavorable factors also fell slightly, from 52.9 to 52.2.
Much of the drop in overall CMI can be attributed to the continued decline in manufacturing. The overall manufacturing CMI number dropped 9 percent from December. In particular, the manufacturing sales index is at its lowest level since December 2002 and the manufacturing credit extended index is at its lowest since January 2003.
The service sector also saw a decline, though not as severe. Service CMI numbers dropped just 0.4 percent to 54.7.
The CMI data has been collected and tabulated monthly since February 2002 and published monthly since January 2003. The index is based on a survey of about 500 trade credit managers during the last 10 days of the month, with approximately equal representation between the manufacturing and service sectors.
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