The CMI jumped from 51.1 to 55, and credit applications and dollar collections also increased. NACM also reports fewer disputes and rejections of credit applications as well as a smaller number of accounts placed for collection. The data suggest that businesses are working to get financial affairs in order in anticipation of better economic times.
November marks the second month in a row that the CMI rose above 50, and that mirrors the trends identified in the Purchasing Managers’ Index. NACM attributes a large increase to a jump in sales (from 52 to 56.3) and a similar increase in new credit applications (from 52.9 to 56.8). The rise took place despite the fact that dollar collections were down and the amount of credit extended was flat, according to NACM. The data suggest manufacturers are anticipating a better year in 2010, the organization reports.
“As sales increase and credit applications are granted, there is a sense that more business is optimistic about the coming year than not,” says Dr. Chris Kuehl, NACM’s economist. “It was revealed in a recent KPMG survey that business confidence is improving, and the CMI provides a clue as to why. Access to credit remains a limiting factor for many businesses, but there is evidence of the logjam loosening. In conversations with credit managers and through the comments sent along with the survey, there is a sense that there are growing opportunities for the best customers and a willingness to get engaged with those showing a plan and some progress.”
Nevertheless, Kuehl emphasizes that the expansion is not rooted in current demand. “Manufacturing remains fragile in the economy at the moment, and much of the focus is now on next year. The sense is that some of the more moribund sectors will start to stage a mild recovery, and manufacturers are trying to get in the proper position. The attempt to catch up on credit is one signal, but so is the expansion of credit application so that future demand needs might be met successfully.”
