Breaking away from the roller coaster ride seen over the last few months, the September report of the Credit Managers’ Index from the National Association of Credit Management (NACM) continued to decline, resulting in the lowest combined index of the last year.
The index of unfavorable factors was mostly to blame for the overall drop, with four of the six categories falling below the 50.0 contraction zone.
“When the unfavorable factors are showing stress, it is an indication that companies are feeling the pinch and may be starting a long downward trend,” said NACM Economist Chris Kuehl.
The index of favorable factors did not do well either, with three of the four categories dropping from the previous month, although all remained above contraction territory. The category of new credit applications showed the only increase, from 57.7 to 58.1, which Kuehl described as an “interesting sign,” while also acknowledging that it is the third-lowest reading within that category in the last 12 months.
“Nearly all the readings are down from where they were a month ago and significantly down from a year ago,” Kuehl said. “There will have to be a big rebound just to get back to where the readings were in October and November of 2014.”