Credit Manager’s Index falls 0.2% in August

The seasonally adjusted index was 50.7 percent last month, the National Association of Credit Management reported. The index is a monthly survey of the business economy from the standpoint of commercial credit and collections.

The report also shows that the manufacturing sector index dropped a percentage point to 50.4 percent, and the service sector index gained a half percentage point, reaching 51 percent, according to a news release.

All three indexes have components at or below the 50 percent level, which is the neutral economic expansion/contraction point.

“Overall, there were no dramatic changes from July’s report. However, in both manufacturing and service, dollar collections and the dollar amount beyond terms worsened,” said Daniel North, chief economist for credit insurer Euler Hermes ACI, which prepares the index report, in the release. “The data suggest that tough economic conditions are strangling buyers’ cash flow. Buyers are stretching their payment terms beyond normal, and even after that, it appears that they still cannot pay their bills.”

North said prices seemed to be less of an issue for businesses in August, but they are instead inflating credit limits and sales, while their customers look to slow payments, the release said. International business, meanwhile, remains strong.

This story originally appeared in SBJ’s Sept. 2 free e-news Daily Update. Click here to register.