NACM: Index Ends Year in Decline
As it did in October, the Credit Managers’ Index (CMI) from the National Association of Credit Management (NACM) slipped again this month, from 55.2 to 54.9. The most dramatic movement was in sales, which plummeted to 56.7, a low last seen in December 2009 and almost a full point lower than in October 2012. This reinforces the notion that business is stalled out in anticipation of what might happen with spending and taxation next year. There was some cautious optimism just a month ago, but that optimism has evaporated, as it seems all but certain that there will be no settlement of lasting value on the “fiscal cliff.”
Strangely enough, the other favorable factors did not register the same level of distress, although they declined as well. New credit applications actually increased from 56.5 to 57.7, suggesting many companies still expect something will get done in Washington before the first quarter of 2013 is completed. At least they seem to be taking steps to get prepared for a better year.
Dollar collections fell from 61.3 to 59.2, which was not a huge drop, but indicates that companies are back to protecting their cash flow and may have started to stretch out their creditors again. There was also a decline in the amount of credit extended, which dropped from 63 to 61.5, taking it back to the numbers seen for most of the year. Overall, the favorable factor index fell from 60.3 to 58.8, a drop that would have been far worse if it were not for the slight improvement in new credit applications.
In contrast, the unfavorable factor index only declined slightly. “Business conditions have not worsened appreciably, it’s just that there is not all that much improvement given the concerns that remain in place regarding next year,” said Chris Kuehl, PhD, economist for NACM.