Market-watchers looking for holiday cheer would be hard pressed to find any in the December Credit Managers' Index (CMI), published by the National Association of Credit Management (NACM). The Combined Index fell dramatically from 57.1 to 55.6, erasing most of the gains made in the last few months and taking the CMI back to levels not seen since the middle of summer. Though the manufacturing index fell by a full point from 56.7 to 55.7, it was the service sector’s two-point fall from 57.5 to 55.5 reflecting a slow response to Christmas and a slowdown in the housing sector that delivered the hardest blow.
The CMI’s four favorable factors registered the biggest declines, as the gains made in the second half of the year seemed to evaporate. Overall, the favorable factor index fell from 61.3 to 59.3, driven by a sharp reduction in sales, which stumbled from 63.4 in November to 58.7 in December, marking the fifth lowest sales reading in the last 12 months. New credit applications dropped by two points from 59.2 to 57.2, a reading not seen since April, and dollar collections slipped a full point from 59.7 to 58.7. The smallest drop occurred in amount of credit extended, from 63.2 to 62.6, which could be the only silver lining in the favorable factor index. "This suggests there might be an opportunity to recover in the coming months," said NACM Economist Chris Kuehl, PhD. "It gives some faint hope that many companies are still interested in making credit available to the customers they trust."