January 15, 2018 / 10:05 AM / a year ago

November Canadian small business lending up after six-month decline: PayNet

OTTAWA (Reuters) - Lending to Canadian small businesses perked up in November after declining for the past six months on gains in the construction and transportation sectors, which could bode well for economic momentum heading into the end of 2017, data showed on Monday.

The PayNet Small Business Lending index rose to 116.9 from an upwardly revised 115.3 in October, making for the first increase since April 2017. However, the measure of borrowing by medium-sized firms declined to 201.1 from 217.3.

Lending to small companies in the construction sector rose to 155.5 from 151.4, while transportation rose to 96.3 from 93.7.

Retail companies also rose to 201.8 from 198.2, though the manufacturing sector continued to lag, with its index falling to 59.4 from 60.8.

Although lending activity to small firms was down 1 percent compared to a year ago, the month-over-month gain is a positive sign that such firms could help lead economic growth, said PayNet President Bill Phelan.

“The small businesses are the canary in the coal mine, the leading economic indicator,” Phelan said.

Although the economy is expected to have moderated in the second half of 2017 after a blistering first half, fourth-quarter growth is still anticipated to be relatively robust.

The PayNet report showed companies’ financial health continued to look strong in November, with the number of firms that were delinquent by 30 days or more declining to 0.86 percent from 0.88 percent. Those that were 90 days or more behind also fell to 0.25 percent from 0.28 percent.

Reporting by Leah Schnurr

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