“This is the least desired outcome,” said NACM Economist Chris Kuehl, PhD. “The main question at the end of last month was whether the readings in September were anomalous or were October’s out of sync. It now appears that the October numbers were the odd ones. That changes the expectations for the rest of the year. There would not be quite the concern were it not for the fact that other economic data tends to support the notion that growth is stalling and worries that seemed to have faded earlier in the quarter have started to resurface.”
November’s CMI will show sales statistics stand as the most variable factor. Virtually every category under the favorable factors designation showed noticeable movement, except for the amount of credit extended.
“This is interesting given the drop in new credit applications, as it suggests that fewer companies were getting credit but those that were receiving credit were getting more than in the past,” Kuehl said. Larger companies appear to be expanding and that coincides with the data coming from the capital expenditure numbers.
Kuehl noted that the breakdown in the unfavorable factors “shows some serious problems developing.” Only one factor, disputes, showed an improvements and there was a dramatic fall in the area of rejection of credit applications. “A sudden tightening of credit is not a good sign,” Kuehl said.
For a full breakdown of the manufacturing and service sector data and graphics, view the complete November 2014 report at http://web.nacm.org/CMI/PDF/CMIcurrent.pdf. CMI archives may also be viewed on NACM’s website at http://web.nacm.org/cmi/cmi.asp.