The September report of the Credit Managers Index (CMI) from the National Association of Credit Management fell to 54.9 from 56.7. While still firmly in the growth category, this is the lowest reading in nearly two years. Not even the Polar Vortex months were this weak and the collapse was felt in a variety of categories. This was not a good month and that brings a great many concerns to the forefront.
This was not a small reversal of fortune by any stretch of the imagination, said NACM Economist Chris Kuehl, PhD. This could be termed a collapse, and it begs a very important question. Which is correct: the Purchasing Managers Index or the Credit Managers Index? In past years, it has been noted that the CMI tends to predict the pattern that will be seen in the PMI in the next month or two. If that assessment continues to be accurate, the economy as a whole may be in for a very rude awakening, Kuehl said. The numbers this month are almost shocking and there will be intense interest in what the index reports in the next iteration as this will determine whether this is the start of a depressing trend or just one of those anomalous months. The one factor that may provide some hope is that August and September are often difficult to get an accurate read on given the vagaries of the summer break and the return to school.
The index of favorable factors hung onto the 60s, but just by a hair with its fall from 63.8 to 60.9. One of the big declines was in sales, which fell from 64.8 to 60.9, a low going back to March. New credit applications went from 60.9 to 59.0. Though not a huge drop, it is now below 60 for the first time since May. Dollar collections went from 62.7 to 59.9, a more substantial drop out of the 60s. Amount of credit extended fell as well, from 66.7 to 64.0. Importantly, these are still decent numbers overall, just not as exciting as they were a month ago. This may have more to do with a surge in the past than any comment on the situation right now.
More distressing is that unfavorable factors worsened, indicating some real business distress. The index fell from 52.1 to 50.9, dangerously close to slipping into contraction territory. Rejections of credit applications actually improved from 51.9 to 52.5, bringing speculation that some companies got a little looser with credit as sales started to sag. Accounts placed for collection fell from 52.1 to 50.7, which worries many as it appears that some of these accounts in trouble were in decent shape not long ago. Disputes increased, causing the factor to slip into the contraction zone--from 50.6 to 49.2. Dollar amount beyond terms also plunged into negative territory, from 50.3 to 47.2. This is one of its sharpest drops all year and a low not seen in almost two years. Dollar amount of customer deductions also declined. It has been sinking for a while and is now sitting at 49.8. Filings for bankruptcies went south as well, moving from 57.5 to 55.8. All in all, these numbers are bad and signal more distress to come.
It is hard to determine just what the issue is given that much of the other economic data of late has been good. Durable goods numbers set a record last month, but that was due to Boeing more than anything else. The data for the second quarter GDP gets better with every revision and there have been improvements in everything from capacity utilization to employment. Has this boom come to an end already? Are these good numbers from the economy not much more than a last gasp before sinking again? Kuehl said. Right now, the CMI data would seem to suggest this, but next months could be a different story.
For a full breakdown of the manufacturing and service sector data and graphics, view the complete September 2014 report at http://web.nacm.org/CMI/PDF/CMIcurrent.pdf. CMI archives may also be viewed on NACMs website at http://web.nacm.org/cmi/cmi.asp.
ABOUT THE NATIONAL ASSOCIATION OF CREDIT MANAGEMENT
NACM, headquartered in Columbia, Maryland, supports more than 15,000 business credit and financial professionals worldwide with premier industry services, tools and information. NACM and its network of affiliated associations are the leading resource for credit and financial management information, education, products and services designed to improve the management of business credit and accounts receivable. NACMs collective voice has influenced federal legislative policy results concerning commercial business and trade credit to our nations policy makers for more than 100 years, and continues to play an active part in legislative issues pertaining to business credit and corporate bankruptcy. NACMs annual Credit Congress amp; Exposition conference is the largest gathering of credit professionals in the world.
Read the full story at http://www.prweb.com/releases/2014/10/prweb12212411.htm
Representatives from Barclays, Aviva, City of London Corporation and Fujitsu are amongst those appointed to a new advisory board which will take the lead on strengthening the code and its enforcement. The government said that the board, which was appointed based on its members good reputations on payment practices, would publish more details of its role in the spring.
Late payment continues to plague businesses, putting a strain on cash flow and preventing plans for growth, said Matthew Hancock, the business minister.
We have committed to tackling this problem, but there is no silver bullet. This is about a change in culture, which needs businesses and governing to work together. The new advisory board will strengthen the Prompt Payment Code, cracking down on poor practice and showcasing good practice, he said.
The government-backed Prompt Payment Code was set up in 2008 by the Institute of Credit Management as a voluntary agreement promoting good payment practices. Code signatories, including a number of FTSE 100 businesses, are obliged to pay suppliers within an agreed time and to make sure that they have proper processes in place for any issues that may arise. More than 1,700 businesses and public authorities have committed to the Code to date.
Late last year, the government published a discussion document and sought views on whether more could be done to change the culture of late payment to small suppliers. The decision to create the advisory board follows calls for a more robust and active Prompt Payment Code in response to that paper. The Small Business, Enterprise and Employment Bill, which is currently before the UK parliament, also contains measures to cut down on late payments in response to the paper, including a new requirement for bigger businesses to publish details of their payment terms for suppliers.
Initially, the new advisory board will have three main duties in relation to the Prompt Payment Code: to improve monitoring and enforcement; promote awareness; and provide advice on whether updates are needed. Its first members are Aviva, Barclays, Bury Council, City of London Corporation, the Confederation of British Industry, the Forum of Private Business, Fujitsu, Greggs, the Institute of Directors, Skanska and Stort Chemicals Ltd.
ICM chief executive Philip King, who will act as co-chair of the new advisory board, said that the timing is now right for the Prompt Payment Code to be strengthened.
The launch of a dedicated Prompt Payment Code Advisory Board is both a positive and exciting step, he said. It will allow individuals to bring their expert advice to the table and identify further improvements to support the creation of an environment where paying on time is the norm rather than the exception.
JMP Group (NYSE:JMP) Insider Kent Ledbetter purchased 26,500 shares of JMP Group stock in a transaction dated Tuesday, October 28th. The stock was purchased at an average cost of $6.63 per share, for a total transaction of $175,695.00. The acquisition was disclosed in a legal filing with the Securities amp; Exchange Commission, which is available at this link.
Shares of JMP Group (NYSE:JMP) traded up 1.84% during mid-day trading on Thursday, hitting $6.956. The stock had a trading volume of 65,958 shares. JMP Group has a 52 week low of $6.00 and a 52 week high of $8.42. The stock has a 50-day moving average of $6.46 and a 200-day moving average of $6.. The company has a market cap of $150.4 million and a price-to-earnings ratio of 13.42.
JMP Group (NYSE:JMP) last posted its quarterly earnings results on Friday, October 24th. The company reported $0.15 EPS for the quarter, beating the Thomson Reuters consensus estimate of $0.14 by $0.01. The company had revenue of $40.30 million for the quarter. During the same quarter in the prior year, the company posted $0.12 earnings per share. Analysts expect that JMP Group will post $0.67 EPS for the current fiscal year.
JMP Group Inc is a full-service investment banking, asset management and corporate credit management firm.
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