Economy Remains Weak But Headed in the Right Direction, Reports NACM's Latest CMI

The reports on the economy were mildly encouraging at year's end, and now the country's attention is turned to 2010 - the year that is supposed to provide the anticipated recovery.
The December Credit Managers' Index (CMI) matched the mood of the economy as a whole - essentially flat, but exhibiting mild progress. The most important aspect of the report is that the index remained above the 50 mark that separates growth from contraction and even showed a slight gain as it moved from 52.3 to 52.9.
"This is hardly the kind of advance that provokes celebration, but given the gloomy assessments made about the 2009 holiday season, the gain is certainly preferable to what had been anticipated," said Chris Kuehl, economist for the Columbia-based National Association of Credit Management (NACM).
The indicators that showed the least movement included sales and new credit applications. "This is to be expected and is consistent with December readings in past years," said Kuehl. "This is the period in which most manufacturers are in semi-hibernation, unless the retail community is frantically trying to bolster inventory. That was not the strategy employed by retail this year; stores held the line on inventory and shoppers eventually caved and bought what was available."
The retail numbers thus far showed a gain of around 4.5% from last year, but these are still preliminary. What did show up as more positive was an increase in dollar collections and an expansion of credit extended. Both of these data points bode well for the coming year, and the fact that there is still evidence of companies seeking to catch up on their debt is making it a bit easier to advance credit - which is considered key to the economy's healthy recovery.