NACM Credit Manager's Index Declines in August

The Credit Manager’s Index (CMI) for August finished at 54.7 percent, down 200 basis points from July 2005. Although there were many factors that contributed to the overall two percent decline, higher levels of receivables beyond terms and bankruptcies had significant impact.

Manufacturing Sector Results
The manufacturing sector finished August at its lowest level since the beginning of the year. The decline was found in nine of the ten factors. Only new credit applications exhibited positive growth, increasing 390 basis points, to end at 62.2 percent. Four of the ten factors finished slightly below the 50 percent level, indicating some erosion.

Service Sector Results
The service sector remained virtually unchanged for August, dropping a mere 10 basis points. Economic expansion was found in all four of the favorable factors, with the amount of credit extended increasing 460 basis points. Among the unfavorable factors, only one?dollar amount beyond terms?dropped below the 50 percent mark.

Comparison of August 2005 to August 2004
Looking back to just one year ago, in both the manufacturing and service sectors, the overall CMI posted lower. Among the favorable factors, most of which were below the previous year?s level, all factors were well above the 50 percent level, indicating continued economic growth.

The CMI data has been collected and tabulated monthly since February 2002. The index, published since January 2003, is based on a survey of about 500 trade credit managers during the last 10 days of the month, with about equal representation between manufacturing and service sectors. The survey asks respondents to comment on whether they are seeing improvement, deterioration, or no change for various favorable or unfavorable factors. There is representation from all States, except some of the less populated such as Vermont and Idaho.

To read the entire release for August, please visit http://www.nacm.org/resource/press_release/pressAug05.html.

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.