from WAIN Street
WAIN Street reported Wednesday that the Business Default Index posted a 0.11% improvement in July to start the second half of the year at 6.98% – its best reading since index inception in December 2009. The index is quoted as a seasonally adjusted, annualized default rate. An increase in the index corresponds to deterioration in business credit quality.
The associated Diffusion Index which measures the degree to which the change in default rate is spread throughout businesses read 49.9 in July corresponding to nearly an equal number of businesses improving and deteriorating in their credit performance. The sustained decline in default rates and stable diffusion values paint a positive picture of decrease in losses incurred by lenders. Said Vidur Dhanda, Publisher, WAIN Street:
Businesses have improved their credit performance to below Great Recession levels. And with the smallest of the small businesses – sole proprietorships and businesses with fewer than 20 employees – posting default rates markedly lower than the aggregate index, lenders now have an opportunity to grow their portfolios and fuel business activity.
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.