The Credit Managers' Index (CMI) remained largely unchanged for the third consecutive month, dropping slightly to 53.5 from 53.7. While not ordinarily great news, given September's strong data, it is not altogether a bad thing that October and November stayed much the same.

"There is a story for just about everyone these days," said Chris Kuehl, economist for the National Association of Credit Management (NACM). "If one is of a more pessimistic bent, there is the continued high rate of unemployment, the struggles in the housing sector and the sense that nobody in the political realm has a clue what to do about any of this. There is the mess in Europe, the gyrations in stocks and consumer polls that suggest that vast numbers of people are in bed with the covers pulled over their heads.

"If you tend toward optimistic, there is something for you as well, especially recently."

Retail numbers are coming in far more robust than anybody anticipated. Black Friday totals were almost 7 percent above last year and records were set in terms of dollar expenditures. Subsequent Cyber Monday sales were also just as dramatic. There is also evidence that manufacturers are setting up to do far more capital spending than in past years. Even the savings rate for consumers has started to creep back up after falling back to 3.3 percent. "It would be nice to see some gains in select areas," said Kuehl, "but there are no emergency warning signs popping up at this point either."

Much the same message can be gleaned from this month's CMI data; there is something to depress the pessimistic and something to provide encouragement to the optimistic as well. The most negative news came in sales, which tumbled from the 61.4 high reached in September to 58.2 in November-the lowest reading in the last year. The decline was seen across the board in both the manufacturing and service sectors. Some of this is to be expected as the end of the year draws closer, and there is reason to expect gains in the months to come if the data on capital expenditure planning is reliable.

Other favorable factors carried better news. Dollar collections improved marginally from 56.8 to 56.9, which marks the second best performance since July behind the jump to 57.8 in September. Even better news came in the amount of credit extended, which moved from 61.9 to 62.4, higher than any month since April. Overall, the index of favorable factors faded slightly from 59.5 to 58.8. This is not a dramatic decline, but it takes the index to levels seen in the depths of the summer, which is a bit of a concern.

There was better news in terms of unfavorable factors, suggesting that fewer companies are in financial distress. This is partly the result of an economic rebound and partly due to the fact that those companies in trouble months ago have either self-corrected or have gone out of business. The index did not shift dramatically, but it moved in the right direction as it moved from 49.9 to 50.1.

Most indicators were pretty stable. Rejections of credit applications trended down slightly from 50.2 to 49.5, suggesting that credit remains pretty tight. There was a slight improvement in dollars beyond terms from 47.6 to 48, but it remains under the all-important 50 mark. The biggest change was in the filings for bankruptcy number. There was a substantial improvement from 53.8 to 56.7 and that is the best performance since May. The indication is that those companies weakened by the recession have already fallen by the wayside and, for the most part, every industry is now working with the survivors. "This is not to say that they don't have their own financial issues," explained Kuehl, "but, going forward, many companies will see opportunities to gain market share from those competitors that have left the scene and that strengthens their ability to gain momentum in the coming year."

The online CMI report for November 2011 contains the full commentary, complete with tables and graphs.

Source: NACM