Canadian small business lending slips in August: PayNet
OTTAWA (Reuters) - Commercial borrowing by small businesses in Canada edged lower in August, data from PayNet showed on Wednesday, as companies adjust to the impact of cheaper oil prices on the country's economy.
PayNet's Canadian small business lending index slipped to 128.7 from 130.5 in July. Its index of medium-sized businesses also retreated, declining to 218.1 in August from 229.5 the previous month.
The decline in borrowing from the medium-sized businesses was less surprising because those are firms that are tied to the energy sector, said PayNet's president Bill Phelan. But the fall off for smaller companies was unexpected.
"It was kind of a surprise because it really means there was a little bit of a step backwards," Phelan said. At just 2 percent growth for small business borrowing compared to a year ago, that barely keeps up with replacement needs for worn out equipment or properties, he said.
Borrowing trends across sectors suggested growth was shifting away from areas related to energy and to more consumer-oriented industries.
The borrowing index for companies in accommodation and food jumped to 272.8 from 265.5, while manufacturing edged down to 60.8 from 61.1.
"That means that there's this underlying consumer strength in the Canadian economy," said Phelan. "It points to this shift ... it's a bumpy road to shift, it always is, but at least it's shifting into the consumers' hands."
Loan delinquencies edged down in another positive sign.
Moderate delinquencies - those that are behind in payments by 30 days or more - edged down to 1.07 percent from 1.08 percent. Loans that were more than 90 days late similarly declined to 0.32 percent from 0.34 percent.
(Reporting by Leah Schnurr; Editing by Diane Craft)
© Thomson Reuters 2017 All rights reserved.