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TORONTO (Reuters) - Commercial borrowing by small businesses in Canada accelerated in September, data from PayNet showed on Monday, in a sign that activity is shifting from big companies to small companies.
PayNet's Canadian small business lending index rose to 142.0 from 131.8 in August. Compared to the same month a year ago, the index rose 14 percent, accelerating from a 5 percent rise in August.
"We are seeing that the small businesses are becoming an engine of growth for the Canadian economy at a time when the big companies, some of them in the energy sector, are contracting," said PayNet's president Bill Phelan.
He said small businesses "are a good leading economic indicator, so that bodes well for future GDP rising from the small businesses economic expansion."
In contrast, PayNet's index of medium-sized businesses, which is more tied to the energy sector, fell to 213.6 in September from 220.7 in August.
Moreover, its decline accelerated, falling 12 percent compared to the same month a year ago, versus a 7 percent drop in August.
Borrowing trends across sectors were consistent with growth shifting away from areas related to energy and to more consumer-orientated industries.
Compared to the same month a year ago, the borrowing index for businesses in accommodation and food rose 16 percent, while professional services rose 36 percent and manufacturing saw an encouraging swing to 2 percent growth after having fallen 3 percent in August.
Phelan also highlighted low impaired loans which leave businesses with the financial strength to invest more.
The Canadian small business delinquency index for 30 days or more fell to 0.92 percent from 1.04 percent in August.
Editing by David Gregorio