Credit index dips in October

The Credit Managers' Index fell nearly a full percentage point to 54.4 in October.

The CMI was 55.3 in September, according to the National Association of Credit Management, which released the latest report last week.

The index is created from a monthly survey of credit and collection professionals who rate favorable and unfavorable factors in monthly business cycles, with any number higher than 50 indicating growth.

The NACM said the most worrying figure in October was sales, which dropped to 57.4, its lowest point since mid-2011. The sales index dropped below 60 in July for the first time since November 2011, rebounded to 62 in August and slipped to 59.5 in September, according to a news release.

"Given that many companies continue to indicate that they are planning more capital expenditures, there is not much to attribute this drop to other than worry about the outcome of the fiscal cliff issue," NACM economist Chris Kuehl said in the release. "The silver lining in this case would be that a solution to the crisis would likely result in a jump in capital expenditures and investment in general. The downside is that the powers that be could still allow the unthinkable to occur."

Though all favorable categories slipped, they all stayed above 50 in October. The amount of credit extended stayed in the 60s at 62.2; new credit applications dropped to 56.6 from 57.4 in September; and dollar collections decreased to 54.6 from 58.5. The overall favorable index fell to 57.7 from 59.5 in September.

The unfavorable index dropped to 52.3 from 52.6. Within the index, dollar amounts beyond terms had the largest decline - to 48 from 51. In the release, the NACM indicated a drop in dollar amount beyond terms could mean companies are struggling to meet obligations.