Credit managers across the U.S. are reporting better economic conditions, especially in the service sector of the latest Credit Managers’ Index from the National Association of Credit Management. The Credit Managers’ Index (CMI) from NACM rebounded in October as credit managers reported better conditions in several factors across the board. However, the overall, combined improvement is not without its caveats. The combined CMI score improved half a point to 54.6.

“Like much of the recent economic data, there are signs of concern showing up but nothing to suggest a serious slowdown or reversal,” said NACM Economist Chris Kuehl, Ph.D. “This up and down activity has started to become routine. This time, the data seems to have been affected by just a few factors—trade wars, tariffs and the upcoming holiday season.”

Despite the one-point rise in the combined favorable factors, sales and new credit applications took a dive. Dollar collections and amount of credit extended were the saving graces, each increasing to a score above 60 for the first time since August. The combined favorables as a whole increased back over a score of 60 as well. Unfavorables only moved the needle slightly, up two-tenths of a point. The reading is still in expansion territory (score above 50) at 50.9, matching readings seen in November 2018 and August 2019, but just shy of the yearly high of 51 in February. Accounts placed for collection and disputes are the only two factors in contraction territory. Dollar amount beyond terms shot to its second-highest score in the last 12 months at 52.

The manufacturing sector did not impress as much as the service sector in October, the second straight month of decline. That has now happened three times in 2019. Even with the drop in October, the sector is still firmly in expansion territory at 53.9. Sales and new credit applications again fell, while dollar collections remained the same and amount of credit extended improved.

“The stumble that manufacturing seems to have taken is thus far not a catastrophic one,” Kuehl said. “It seems more than a little artificial given the overall confidence level of the consumer and the fact that inflation has not triggered the Fed to try to slow down the economy.”

Favorables increased slightly, but it was the unfavorable factors that took a sharp turn. Disputes sank roughly four points, and accounts placed for collection and bankruptcies also declined. Rejections of credit applications was the only factor to improve in October.

The service sector led the way in October, tying its third-largest increase in the last 12 months. The service index increased from 53.9 in September to 55.3 in October. This is because the opposite is true here with dollar collections skyrocketing forward more than seven points and an increase in amount of credit extended. However, sales and new credit apps still declined.

“This is the period that has long been referred to as the Black Quarter,” Kuehl said, “as this is when the retail community will make the bulk of its income.”

Unfavorables showed a 1.3-point jump to 51.4—three straight months in the expansion zone—helped by dollar amount beyond terms re-entering expansion territory. Accounts placed for collection improved but stayed below 50, and dollar amount of customer deductions decreased yet remained above 50.

For a complete breakdown of the manufacturing and service sector data and graphics, view the October 2019 report.