The NACM (National Association of Credit Managers) CMI (Credit Manager's Index) was up +0.5pts to 55.1 in August, putting it solidly in the expansion/positive zone, with a slight upward trend, and largely mirroring the trends seen in the ISM PMIs. Basically credit managers are saying that credit conditions are for the most part favorable at this point.
One of the details of the survey that we have been monitoring is the indicators for credit demand/loan growth i.e. the New Credit Applications and Amount of Credit Extended subindexes. On both counts, these have been running at a much improved pace this year (cf. last year). This is consistent with our view that loan growth will reaccelerate, and partly offset the tightening impact of expected policy normalization by the Fed. Thus while we have noted increased risk of a short-term correction, the underlying fundamental economic trends are positive and favor risk/reflation assets at this point.
The indicators for credit demand/loan growth are holding up at solid levels, following a sharp improvement seen at the turn of the year. This is consistent with other indicators we have seen which point to improved loan growth ahead.
The interplay between credit conditions and economic conditions is clear in this chart, and at this point conditions look good in both respects.
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