The National Association of Credit Managers’ reported the February Credit Managers’ Index (CMI) is now sitting at 55.8, rising a full percentage point above January’s reading. The index is at its highest since April 2011.

“The mood of the country could best be described as cautious and perhaps a little encouraged as far as economic growth prospects are concerned,” said Chris Kuehl, PhD, economist for the National Association of Credit Management (NACM).

The cautious part stems from the sudden spike in the price of oil and its impact on the price of gasoline. In the past, this kind of leap has been enough to send the economy hurtling into a recession, but thus far the consumer seems to be taking the hike in stride. This situation is not expected to last, Kuehl noted. If the threat of high prices is temporary, the consumer and the business community will heave a sigh of relief and will continue to focus on the good news that has dominated the start of the year. “There has been good news on the job front, better demand numbers, better growth numbers and better numbers in the CMI,” he said.

The sales number is one of the most watched and it reached a level not seen since last April (64.4). “Once there is positive movement in the general sales category, there is often improvement in the index of unfavorable factors as well,” said Kuehl. “An expansion in sales allows companies to catch up on their debt and improve their overall credit standing.”
 
Dollar collections jumped as well, dramatically—from 56.8 to 63—and like the expansion in sales is a sign of improved business conditions.
 
More positive movement came from the amount of credit extended, which rose slightly from 63.3 to 64.3. “This bump in overall business activity is a precursor to additional expansion,” Kuehl added. The only decline for the month was in new credit applications, which fell from 61.9 to 59.5. It was not a big drop, but suggests that many of those that were looking to expand and needed credit have already made their move.

The index of favorable factors rose from 61.4 to 62.8, marking the best reading since February 2011. This is also the third month in a row that the favorable factors index has been over 60. The index of unfavorable factors has also shown improvement as it moved from 50.3 to 51.1. “The damage from the recession is still manifesting in the unfavorable categories, but at least the index has remained above 50 for the past four months, and the current reading is better than it has been since April of last year,” said Kuehl. “The theme here is that the CMI is about where it was in the spring of 2011, a period during which optimism was peaking. The problem in 2011 was that conditions deteriorated sharply after that peak and by the middle of the summer, the economy was back in the doldrums and the CMI was reversing course swiftly.”
 
To read the full report from the National Association of Credit Managers, click here: