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For the first time in over a year, the Credit Manager's Index, which measures economic factors affecting credit and collection professionals, is signaling economic expansion.
The seasonally adjusted index for October increased to 51 from 49.8 in September, according to a report by the National Association of Credit Management. Any score above 50 indicates economic expansion. The index was up 6.2 points from 44.8 in October 2008.
"Not only has there been some expansion in terms of credit availability, but there continues to be evidence that companies are catching up on their debt," Chris Kuehl, the association's economist, states in the report. "Companies that had been behind in their obligations are catching up in anticipation of further growth and the need to ask for more credit in the future."
The index consists of four favorable factors, such as sales and the amount of credit extended, and six unfavorable factors, such as accounts placed for collection and bankruptcy filings.
Progress was made last month in both the positive and negative indicators, whereas the majority of the progress in September was in the negative indicators, according to the report.
Index data indicates a significant improvement in dollar collections, and that the amount of credit extended is at its highest in more than a year. There also were far fewer accounts placed for collection and fewer applications rejected, which could suggest that many of the applicants are more creditworthy than they have been in past months.
