Corporate Finance

Consumer Not Coming to the Rescue: NACM

The manufacturing and services sectors produced subpar numbers for November, according to the National Association of Credit Management.
Katie Kuehner-HebertDecember 1, 2015

Both the manufacturing and service sectors experienced a decline in November, according to the National Association of Credit Management’s Credit Managers’ Index. The combined CMI index, which measures metrics like dollar collections, credit applications, and amount of credit extended, dropped more than a point, from 53.9 in October to 52.6 in November.

“The trend has returned to the stress of the last few, and the timing is not as it should be,” NACM Economist Chris Kuehl said in a press release on Monday. “This is the time of year that the consumer comes to the rescue, but it doesn’t appear that will happen this time.”

The respective favorable and unfavorable index factors in NACM’s combined CMI both worsened from the previous month. Every subcategory within these indexes also declined, with four out of the six “unfavorable categories,” including accounts placed for collections and disputes, in contraction territory with a reading below 50.

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“Given all the data that has been emerging as far as the economy’s overall strength, this is not a big surprise, but still a disappointment,” Kuehl said. “It seems that companies are struggling at this point in the year and that is not a good sign given that this is the time when these companies are expected to make the bulk of their money for the year. This really applies mostly to retail, but the manufacturers respond to that retail drive.”

For manufacturing, sales slipped from 57.7 to 55.5 — a near repeat of September. The new credit applications category shifted down as well, but only slightly from 57.3 to 57.1. The dollar collections category slid from 56.4 to 55.6 and the amount of credit extended reading fell out of the 60s to land at 59.

“These are certainly not numbers that would cause panic — they are all firmly in the expansion zone,” Kuehl wrote in the report. “The problem is that they were higher just a month ago.”

For the services sector, the sales category slipped “quite a bit” from 58.9 to 56.5 and is as low as it has been since June. The new credit applications category also fell out of the 60s and is at 58.9. Dollar collections fell to 55.9 from 57, and the amount of credit extended reading stayed in the 60s, but fell from 65.6 to 63.1.

“This is supposed to be the time of year for the service sector to light up, but so far that has not been taking place and there isn’t much time left for that turnaround to get underway,” Kuehl wrote.