NACM Credit Manager's Index Report for October 2005

The Credit Manager’s Index remained unchanged in October. Sharp deteriorations in bankruptcy filings, sales, and new credit applications were offset by modest increases in the other seven components of the Index. “As noted previously, the worsening in bankruptcy conditions was quite likely driven by the switch to more creditor-friendly bankruptcy laws on October 17th,” says Dan North, Chief Economist with credit insurer Euler Hermes ACI.

“In the manufacturing sector, sales took a steep fall of 5.2 percent, however this fall appears to be seasonal in nature, since orders for the holiday season have almost certainly peaked. This erosion in sales is often seen in November and December as well,” adds North. “New credit applications worsened in both sectors, suggesting, like the fall in sales does, a seasonal drop off in demand. Overall, the CMI remains at 56.6 versus 56.4 last year, demonstrating solid, if unexciting growth.”

Comparison of October 2005 to October 2004
October 2005′s CMI shows a slightly higher CMI compared to just one year ago. Finishing up 40 points over its October 2004 level, October 2005 ended at 56.6 percent. When comparing today’s favorable factors to just one year ago, two areas of interest emerge. First, 70.1 percent of credit manager said that sales were higher, compared to only 63.3 percent a year ago; this is an increase of 680 points. Another area of interest was the higher level of credit extended. In October 2004, credit managers reported 63.7 percent, compared to 70 percent for October 2005.

The National Association of Credit Management (NACM), headquartered in Columbia, Maryland supports more than 25,000 business credit and financial professionals worldwide with premier industry services, tools and information. NACM and its network of Affiliated Associations are the leading resource for credit and financial management information and education, delivering products and services, which improve the management of business credit and accounts receivable. NACM’s collective voice has influenced legislative results concerning commercial business and trade credit to our nation’s policy makers for more than 100 years, and continues to play an active part in legislative issues pertaining to business credit and corporate bankruptcy. More information is available at www.nacm.org.