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June CMI Disappoints After Small Positive Trend

The June Credit Managers' Index (CMI) is not what credit professionals would have hoped for following two straight months of improvement; however, the report is not all bad despite the 0.7-point decline. June's combined reading of 55 is still comfortably within expansion territory (score above 50).

"Last month we were grasping at straws and thought we might have the beginning of a trend, but that didn't last long," said NACM Economist Chris Kuehl, Ph.D. "This month, there was a substantial decline in the manufacturing sector and minor one as far as service was concerned."

Much of the slight drop is due to the combined favorable factors, with sales the biggest culprit. While remaining in the 60s, sales slid 5.5 points in June. New credit applications and amount of credit extended also slipped while remaining in the 60s. Combined unfavorables continued to climb into expansion territory at 50.7 in June, helped by gains in rejections of credit applications, accounts placed for collection, dollar amount of customer deductions and bankruptcies. Accounts placed for collection and dollar amount of customer deductions were back in expansion territory at exactly 50.

"The bad news is that the two-month positive trend has ended. but the good news is that there has not been the dramatic decline that has been seen in some of the other indicators," said Kuehl.

-Michael Miller, managing editor

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Monday, 25 May 2020