WAIN Street Business Default Index shows businesses eked out credit performance improvement

Business Default Index posts narrow improvement of 0.06%

WAIN Street reported Tuesday that the Business Default Index value for October 2013 was 6.06%—a month-over-month improvement of 0.06%.  The index is quoted as a seasonally adjusted, annualized default rate.  An increase in the index corresponds to deterioration in credit quality.  The improvement was narrow with a near equal number of businesses improving and deteriorating in credit quality.  Performance by geography and industry sectors was uneven.

Vidur Dhanda, Publisher, WAIN Street, said Thursday, “The improvement is remarkable considering the drama in D.C. at the start of October.  However, one should not read too much in the narrow improvement of the headline number.  Businesses continue to face strong headwinds as reflected in the steep decline in consumer confidence, weak business investment and decrease  in small business optimism.  The variations in credit quality by industry sector and geography revealed by the index reinforce the need for a high resolution perspective in addition to high-level aggregate indicators.”

Highlights from the November 2013 report:

  • LA, AK, SD and VA business default rate less than half national rate
  • AZ and NV default rate more than double national rate
  • MS, GA and AL business credit quality improved the most in last twelve months
  • Mining sector businesses continue six-month trend of deterioration in credit quality
  • Construction sector default rate 1.5% higher than national rate
  • Information sector default rate 1.5% lower  than national rate

The WAIN Street Business Default Index is computed monthly based on the credit performance of nearly 18 million US businesses that have been tracked by WAIN Street for over 12 months.  WAIN Street’s newsletter, Taking the Pulse, helps readers peel back the layers and zoom into the nuances and variations in business credit quality.