Canadian small-business investment shows shift in economy: PayNet

Thu Jun 25, 2015 5:30am EDT
 
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By Leah Schnurr

OTTAWA (Reuters) - Small-business investment increased in most parts of Canada in the first quarter, with the exception of two of the country's most oil-sensitive provinces, as firms adjusted to the fallout of lower crude prices, data from PayNet showed on Thursday.

PayNet, which tracks commercial financing for millions of small and medium-sized businesses in North America, said a shift in the economy is underway, as regions less reliant on oil production make a greater contribution to growth. It estimates it will take another one to two years for this shift to play out.

The regional breakdown, which was prepared exclusively for Reuters, showed that Alberta and Saskatchewan together were the only part of Canada to see a decrease, with investment falling by an average 1 percent in the first quarter compared with the fourth quarter of last year.

In Ontario, Canada's most populous province and its manufacturing heartland, investment rose 1 percent. In British Columbia and Manitoba investment rose 4 percent, while Quebec saw an increase of 2 percent. In the Maritime provinces investment rose 3 percent.

Lending nationally increased by 1 percent in the quarter, according to previously released PayNet data.

"It's going to take anywhere from 12 to 24 months to fully reshuffle the economy from energy to manufacturing and the consumer," Bill Phelan, president of PayNet, said.

Barring any unexpected global developments, "this will actually make the Canadian economy more resilient, less concentrated on the commodity sector and probably better positioned for longer sustainable growth," Phelan added.

Canada's economy contracted at its steepest pace in nearly six years in the first quarter but economists are looking for growth to pick up later in the year.   Continued...