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OTTAWA (Reuters) - Lending activity to small Canadian businesses edged down in January, though borrowing by larger firms accelerated, data showed on Wednesday, pointing to an economy that is still recovering from an oil price shock two years ago.
The PayNet Canadian Small Business Lending Index decreased to 120.3 from 121.9 in December, while lending was down 6 percent compared to a year ago.
But medium-sized companies fared better, rising to 238.3 from 221.7. Activity was flat from a year ago.
Small business lending has fallen from a peak reached in June 2015 as the economy was hit by the drop in the price of oil, a major export for Canada.
But economists expect the worst of the oil fallout is over. Small business lending is also improving compared to the double-digit annual decreases seen last year, said PayNet President Bill Phelan.
"Overall, private companies have been digging themselves out," said Phelan.
Lending in the accommodation and food sector picked up, rising to 222.3 from 212.8. But the manufacturing sector, which economists had hoped would help drive growth, fell to 62.5 from 63.7.
The financial health of companies remained solid, with the number of small businesses that were 30 days or more behind on loans holding steady at 1.11 percent.
Those that were late by 90 days or more edged down to 0.35 percent from 0.36 percent.
Reporting by Leah Schnurr; Editing by Bernard Orr