National Association of Credit Management sees index rise
Last edited 2:10 p.m., Feb. 1, 2011
The National Association of Credit Management’s Credit Management Index jumped from 56.4 from 55.8, its highest point since April 2010.
The index dipped to 53 by August, but according to Chris Kuehl, managing director of Armada Corporate Intelligence and NACM economic adviser, current index data point to overall growth in credit availability, a positive economic indicator.
“The assertion is that 2011 is the transition year 2010 was supposed to be,” Kuehl said in a news release. “The green shoots that started to appear about this time last year wilted and died by the end of spring, but 2011 is starting to show some signs of greater economic stability.”
Credit extension figures rose to 64.8 from 61.7, which is significant because sales and credit applications slowed slightly after the holidays, according to the release. The credit indicator has not been above 62 since the first part of 2008, according to NACM. The index also showed that banks are reporting more credit availability and that rejections of credit applications are down.
“As companies start to see increased sales and begin to anticipate growth opportunities in coming months, it is important that they get positioned to take on more debt, if needed, for that expansion,” Kuehl said in the release, adding that in the midst of the downturn companies tried to conserve cash flow at all costs.
He said as companies recover and catch up on their debt, they are in a position to request more credit, and are in a position to be granted that access.
NACM, which has its headquarters in Columbia, Md., offers credit and financial management information in support of its roughly17,000 clients worldwide in the business credit and financial services industry.[[In-content Ad]]