Credit Availability Expands in Manufacturing

“The beatings on the economy have stopped, but every bone has been broken,” according to a recent report from the National Association of Credit Management (NACM).

Third-quarter GDP numbers show 3.5% growth after four quarters in the negative category, and the credit managers’ index (CMI) has advanced beyond the 50 barrier for the first time in more than a year, according to the latest CMI report, a monthly survey of credit and collection professionals. Both the service and manufacturing sectors are expanding, and the CMI as a whole points toward growth.

“Not only has there been some expansion in terms of credit availability, but there continues to be evidence that companies are catching up on their debt,” says Dr. Chris Kuehl, economic analyst at NACM. “Over the last few weeks, I have spoken at several NACM events and have heard similar stories at each. Companies that had been behind in their obligations are catching up in anticipation of further growth and the need to ask for more credit in the future. By the same token, comments by attendees suggest that there is more money starting to filter into the system, making credit more accessible than it has been in some time.”

“After falling just short of the growth mark in September at 49.6, manufacturing numbers are now past the neutral zone and are standing at 51.2,” Kuehl notes. “This is a pretty sharp gain, given the slow development over the last several months. While it took from July to September to move 1.3 points, it only took one month for the sector to move 1.6 points to reach October’s numbers. This is rapid expansion by any measure.”

However, “the climb has been steep and awkward, and the numbers are still far from robust,” says Kuehl, “but the trend is clearly headed in the right direction.”

Read the full report.

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