Creditors may find a few rocks mixed in with their candy corn and caramel apples this Halloween, as NACM’s Credit Managers’ Index declined for the month of October. The retreat should not come as a surprise, however, after the index reached its highest level in over two years last month. Good news reigned among the favorable factors, though the difference in performance with the unfavorable factors remains stark.
“The storms altered a lot of economic patterns,” said NACM Economist Chris Kuehl, Ph.D. “That has been seen in everything from volatile job numbers, changes in the rate of housing starts and even internal migration patterns for skilled workers. There are already signs of shifts as reconstruction gets thoroughly underway.”
The combined score for the index came in at 55.5, down one point from September. Among the favorable factors, sales declined but still maintained the second-best reading of the year. An indication of a greater demand for credit and a desire to grow and expand was to be found in the improved numbers for new credit applications.
Last month, almost all the unfavorable factors were in expansion territory; all but two fell into the contraction zone in October, though the overall reading leveled off at 50. Dollar amount beyond terms fell into contraction with a decline of three points. “The volatility that has characterized the CMI for the last several months has been largely attributed to the vagaries of the slow pay,” explained Kuehl. Filings for bankruptcies and rejections of credit applications also declined, but stayed in expansion territory. Accounts placed for collection slipped out of expansion into contraction; the reading for disputes did as well, with a fall of over four points.
“What doesn’t show up that well with this data is the stark difference between the readings for the favorable categories and the unfavorable,” concluded Kuehl. “The favorable numbers are consistently in the 60s and the unfavorable keep sinking into the 40s and the contraction zone.”
– Adam Fusco, associate editor