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USA - NACM's Credit Managers' Index for January starts year in favorable direction

By CreditMan Saturday, January 31, 2015

Movement in January's economic report from the National Association of Credit Management's delivers a cautiously optimistic start to the new year as the index improves slightly. The combined index rose this month after two consecutive months of slippages.

The January report of the Credit Managers' Index (CMI) from the National Association of Credit Management (NACM) has joined the ranks of the cautiously optimistic. After two consecutive months of slippages, the monthly economic indicator's combined score moved forward to 55.1 in January, up from 54.9 in December.

"This is certainly not a spectacular turnaround as the index was at 55.8 and 57.0 in November and October, respectively," said Chris Kuehl, Kansas City-based NACM economist. "The fact is January's reading is still the third lowest in the past year, but it is trending in the right direction this month."

The survey of business-to-business credit professionals measures activity in manufacturing and service sectors, including credit applications, collections and extensions.

Slight improvement in readings for unfavorable factors sent a positive message because the numbers have held close to the line between contraction and expansion. "Only one reading remains under 50 compared with last month, which had three," Kuehl said. "While there's nothing to suggest an imminent boom, it would appear that conditions have started to improve."

Highlights include a 3.5 gain in dollar collections, which "signals that companies are paying their bills more regularly," Kuehl said. A pullback in credit activity, however, suggests "there is more caution within the credit community as a whole, and that is affecting the number of applications as well as the amount of credit extended."