July Credit Managers’ Index Rebounds to Pre-Pandemic Levels



The Credit Managers’ Index from the National Association of Credit Management rebounded to pre-pandemic levels after shutdowns and preventative measures greatly impacted the U.S. economy.

Every factor of the combined July Credit Managers’ Index (CMI) from NACM increased — some more than others — returning to pre-pandemic levels. This steady increase over the past few months has now arrived at data levels last seen in early 2020 and late 2019. The combined CMI increased 4.7 points in July to 55.6, roughly where it was in November 2019. The CMI has now climbed more than 15 points in the past three months.

“The recovery from the depths of the lockdown recession has been impressive, but now the primary question is whether it can be sustained,” Chris Kuehl, PhD, economist for the NACM, said. “There has been a slowing of the process when it comes to ending the lockdown, and some states have resumed these shutdowns. Will that drag these numbers back down? It is too early to tell at this juncture.”

Sales, once down in the dumps in April, climbed to its highest number (64.3) since August 2019. New credit applications and dollar collections were both above 62 in the same CMI for the first time since August 2018. Amount of credit extended improved about two points to 57.3 in July. The overall favorable factor score improved to 61.6, the same as it was in November 2019.

The unfavorables also saw a number of improvements — five of the six categories were above or at the expansion threshold of 50. “There was some expectation that there would be a decline in the unfavorable numbers by this point, but that has not yet been the case,” Kuehl said.

Rejections of credit applications inched upward two-tenths of a point to land at 50, while accounts placed for collection and disputes increased just below 51. Dollar amount beyond terms shot up roughly 13 points to 57.3 in July. One factor that usually sits in contraction territory, dollar amount of customer deductions, also improved to 52.4, the highest level since November 2013 and just slightly better than this past January. After four straight months of declines, filings for bankruptcies has now seen back-to-back increases to sit at 48.8 in July.

The manufacturing sector was led by another strong showing in the sales category, which is now more than three times higher (66.3) than it was in April (21.4). New credit applications and dollar collections each jumped back into the 60s, while amount of credit extended improved under two points. The overall favorables increased to 62.2 in July from 55.7. Only two of the unfavorables stepped over into expansion territory — dollar amount beyond terms (53.7) and dollar amount of customer deductions (52) in July. The other four are within striking distance, all under a point away. Accounts placed for collection and disputes each improved more than two points, but filings for bankruptcies and rejections of credit applications had a slower pace forward. Overall, manufacturing hit just over 55, still with a little work to do to reach levels seen in early 2020.

The service sector reported vast improvement as well in July, notably in dollar amount beyond terms, which hit its second-highest score ever at 60.9. Also, within the unfavorables was accounts placed for collection improving to 52.2 from 46.4 as well as a noticeable improvement in filings for bankruptcies to 48.3 from 46.5. Rejections of credit applications, disputes and dollar amount of customer deductions each improved and stayed in expansion territory. In the favorables, sales saw a 12-point jump, and dollar collections improved by 8.5 points. New credit applications and amount of credit extended also increased slightly. Overall, the service sector improved five points to 56.1 in July.

“The service sector is immensely diverse, and that has been apparent as the pandemic crisis has unfolded,” Kuehl said. “The data that is collected for the CMI is heavily weighted toward the retail sector as opposed to some of those areas that sustained the biggest economic blows. The recovery in retail has been substantial and that has allowed the progress in the CMI numbers as well.”

For a complete breakdown of the manufacturing and service sector data and graphics, view the July 2020 report.

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Terry Mulreany
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