OTTAWA (Reuters) - Lending activity to small Canadian businesses dipped in February, though borrowing by medium-sized firms rose for the fourth month in a row on strength in the construction sector and oil-related provinces, data showed on Thursday.
The PayNet Small Business Lending Index declined to 116.1 from 117.2 in January, while the gauge for medium business lending rose to 232.8 from 230.9, the highest level since January 2016.
The mild pullback for small businesses and the relatively low delinquency rate suggests companies will be poised to take advantage of stronger economic growth when it comes, said PayNet President Bill Phelan.
“They’re not finding a lot of organic economic growth but they’re not risking a lot, they’re not putting a lot of new capital to work,” Phelan said. “They’re maintaining their financial resources until the day they find some more growth.”
Canada was hurt in 2015 by the sharp drop in the price of oil, a major export, but stronger economic data recently has suggested the economy may be turning a corner. At the same time, oil has recovered to trade around $50 a barrel.
In oil-producing Alberta, the index of loan originations rose to 167.1 from 166.4. Activity in Saskatchewan, which is also sensitive to commodity prices, increased to 261.2 from 260.6.
Activity in the construction sector rose to 135.4 from 133.6. Housing activity in Ontario, British Columbia and Quebec gave the sector a lift, Phelan said.
The number of small businesses that were 30 days behind on their loans held steady at 1.11 percent, while those that were 90 days or more late remained unchanged at 0.35 percent.
Reporting by Leah Schnurr; Editing by Chizu Nomiyama