For the third consecutive month, the Credit Managers' Index is signaling that the recession is over and the economy is expanding, according to a report issued last week by the National Association of Credit Management.
The index, which measures economic factors affecting credit and collection professionals, increased to 52.9 in December. In October, the index — at 51 — pushed above 50 for the first time in more than a year. Any score above 50 indicates economic expansion.
"This is hardly the kind of advance that provokes celebration, but given the gloomy assessments made about the 2009 holiday season," said Chris Kuehl, an economist at the Columbia, Md., trade group. The economy remains weak, the NACM said, but is heading in the right direction.
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. Preliminary retail numbers showed a gain of around 4.5% from a year earlier, while increases were seen in collection dollars and credit extended, factors that boosted the index.
For December, the indicators that showed the least gain included sales and new credit applications. "This is to be expected and is consistent with December readings in past years," Kuehl said. "This is the period in which most manufacturers are in semihibernation."
