OTTAWA (Reuters) - Lending to Canadian small- and medium-sized companies jumped in December, a report showed on Wednesday, pointing to improved business confidence that could lead to stronger economic growth.
The PayNet Canadian Small Business Lending Index rose to 127.7 from 119.0 in November, its highest level in a year. Borrowing by medium-sized businesses was similarly robust, climbing to 233.5 from 215.6.
Lending activity fell in the latter part of 2015 through much of 2016 as companies dealt with the fallout of cheaper crude prices, which disrupted the oil-exporting economy.
But the pickup at the end of last year shows companies are feeling better, said PayNet President Bill Phelan.
“Growth is elusive still but at least the contractions are in the past,” said Phelan. “(Companies) are poised for expansion because the financials are really strong.”
The commodity-sensitive provinces of Alberta and Saskatchewan saw the biggest increases in business lending activity, supporting economists’ expectations that the worst of the fallout of the oil price shock is past.
By sector, the gauge of lending to the wholesale industry, which includes commodities, rose to 157.6 from 153.9. The agriculture sector also improved to 201.7 from 196.6.
Manufacturing was a sour note, with lending in the sector falling to 63.8 from 66.1.
The number of small businesses that were 30 days or more past due on their loans edged up to 1.11 percent from 1.09 percent. But those that were 90 days or more behind slipped to 0.36 percent from 0.37 percent.
Reporting by Leah Schnurr; Editing by Lisa Shumaker