Credit conditions continue to improve in June
NACM's CMI index ticks up again
Dave Hannon -- Purchasing, 7/1/2009 4:04:38 PM
The monthly Credit Managers Index from the National Association of Credit Management ticked up again slightly in June, showing stability and gradually improvement in credit markets.
The CMI index increased more than a point from 45.4 to 46.6, trending very close to the 50-point mark, which indicates expansion. The index measures both favorable and unfavorable factors. Its measurement of favorable factors shows sales and new credit applications are both up dramatically, there has been a significant increase in credit granted and dollar collections are up. In fact, new credit applications broke the 50 point barrier, indicating expansion for the first time since last August.
In unfavorable factors, there were fewer bankruptcies and fewer disputes.
So, what do these readings mean for manufacturing? Well, according to the NACM report, "There has been a big jump in dollars collected and that suggests that the prolonged slump in manufacturing is starting to ease. There has also been a big increase in credit and that plays even more positively given the fact that there are still some major issues in key manufacturing sectors."
"The fact that the CMI is stable for the last three months is a good sign as far as inflation threats are concerned," said Chris Kuehl, NACM's economic analyst in its monthly report. "If there was an imminent danger of too much liquidity, it would be reflected in a sharp rise in the index. This has not manifested itself thus far."
As reported on Purchasing.com, in May, the CMI rose to 45.5 after increasing 1.3% in April and 2.5% in February and 0.5% in March.
Another major index tracking the credit markets also took a step in the right direction this month. Kamakura Corp.'s credit conditions survey and data on trouble public companies both improved in June.
In another sign that bodes well for the credit markets, Reuters reports that General Electric's John Rice recently said he expects credit conditions to improve by 2010.
Credit Conditions Improve
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