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“Something amiss…so it would seem”

June 30, 2014 in Economics

By Mark Thornton

The National Association of Credit Management issued its Credit Managers Index, calling it “less than impressive.” “It now appears that the economy contracted by far more than originally reported,” NACM economist Chris Kuehl said. “Add to this the latest data on durable goods and there is something amiss. Consumer confidence numbers have recovered to levels not seen since the start of the recession, but that renewed level of enthusiasm has not been enough to pull the economy forward, or so it would seem.” Most importantly the number of applications for credit increased, but so did the rejection rate. According to Kuehl. “When there are more applicants and more rejections, it is a signal that more companies in financial distress are seeking credit in the hopes that somebody will help them survive.”

Columbia, MD: June 30, 2014—This month’s Credit Managers’ Index (CMI) reading from the National Association of Credit Management (NACM) was 56.1—barely higher than it was in April, but falling well below May’s 56.8. The readings had been closing in on 60 (57.1 in November and 57.3 in January) and are still firmly in positive territory, but are now just not trending in the preferred direction. The services sector took the brunt of the impact, and the manufacturing sector did not budge, for the second month in a row.

After the readings last month, it was thought that the CMI would show continued progress, but the manufacturing sector was flat and the service sector experienced a very sharp decline—enough to drag the index down. “The drop was unexpected, which has suddenly become a common refrain as some other data releases are starting to show similar trends,” said NACM Economist Chris Kuehl, PhD. The economy is clearly not out of the woods just yet, and the latest revision of first quarter GDP came as a shock. “It now appears that the economy contracted by far more than originally reported,” Kuehl said. “Add to this the latest data on durable goods and there is something amiss. Consumer confidence numbers have recovered to levels not seen since the start of the recession, but that renewed level of enthusiasm has not been enough to pull the economy forward, or so it would seem.”

The damage was greater in the unfavorable categories although the favorable factors saw some decline as well. The combined index of favorable factors deteriorated slightly from 62.7 to 62.4, but that is still …read more

Source: MISES INSTITUTE

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