This month’s CMI is the tale of two economies and two strategies. There is some continued good news in the index as far as sales and credit availability is concerned but there is some very bad news as far as the toll this economy has taken on business thus far.
The growth in sales was impressive and the index is now well into the 60s with a reading of 66.3. This is the highest level reached since the recession started in 2008. The same growth was seen in the number of credit applications, rising to 60.3 after slipping to 58.6 in last month’s index. The 56.4 reading this month is the same as last month despite the good numbers. This is the vexing part of a transition economy.
Two of the negative categories that showed the biggest increase were bankruptcies (moving from 59.1 to 56) and accounts placed for collection (moving from 52.5 to 49.9). There was deterioration in many other categories as well. In the end, the declines in the unfavorable sectors dragged the whole index down and left the CMI flat for the month.
This is a part of the transition out of a recession that can be the most brutal. Companies that had been hanging on for dear life could survive when there was little additional pressure. Now that the competition is starting to heat up these struggling companies are left with poor options.
Courtesy Dr. Chris Kuehl, Armada Corporate intelligence and Chief Economist NACM