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COLUMBIA, MD – GDP numbers are the best in more than 18 months, suggesting the recession is in clear retreat, says the National Association of Credit Management.
After a mild recovery in the third quarter, numbers jumped 5.8% in the fourth. The bulk of this growth is attributed to manufacturers starting to replenish inventories, mostly since the beginning of December, says the NACM.
This shift is reflected in the Credit Managers’ Index numbers as well. “The jump in manufacturing was stark and unexpected and, since the decline registered in the last iteration of the index, there has been a major leap in some critical areas,” said Chris Kuehl, Ph.D., economist for the NACM. “The combined CMI saw a jump from 52.9 to 55.1, which is impressive enough, but the real movement came from the manufacturing side,” he said.
The manufacturing sector jumped from 52.1 to 55.1, reversing the trend from the December index when the sector stagnated and slipped in terms of positive factors.
Atmosphere was improved in both manufacturing and service sectors, resulting with the most activity in the combined index’s favorable factors, specifically sales and new credit applications, according to the association.
Sales in the combined index jumped from 56.7 to 60.7, marking the first time this figure has been above 60 in 18 months. There was also progress in new credit applications – a jump from 54.2 to 57 – signaling movement in the credit sector.
One of the biggest leaps came from dollar collections, now at 61.3, after sporting readings in the 40s nine months ago.
The same pattern can be seen in amount of credit extended, now at 58.8, after sitting in the 40s just five months ago.
Thus far, these are the highest numbers seen since February 2009. Since then, growth has been even, but not dramatic, says the NACM. That trend of slow growth is likely to return, but the suggestion from this month’s data is substantial gains for the bulk of the first quarter.
Service sector gains were not as dramatic as the manufacturing sector, but there was growth. In both sectors there has been some improvement in terms of the number of accounts placed for collection and the number of disputes, and there has been a fairly steady decline in the number of bankruptcies as well.
The contrast between January 2009 and January 2010 is stark. It was a year ago the recession reached its deepest point, and the index showed numbers buried in the 40s. Now the index has climbed into solid expansion territory and is well into the mid 50s.