OTTAWA (Reuters) - Commercial borrowing by small businesses in Canada cooled for the third month in a row as lower oil prices and weak domestic demand dampened business investment, data from PayNet showed on Tuesday.
PayNet’s Canadian small business lending index dipped to 123.5 in February from 127.0 the month before. The measure of lending to medium-sized businesses tumbled to 214.9 from 230.5.
The year-over-year gains from industry sectors including accommodation and food, construction and manufacturing were not enough to offset the decreases in agriculture, transportation and wholesale.
“The small businesses are moving in the wrong direction ... and the big companies aren’t healing, they’re still in the throes of contraction,” said PayNet’s President Bill Phelan.
“What’s going on at a high level after you boil down all the industries and provinces is that the ‘tax break’ from lower oil prices is not being spent by consumers,” he said.
The drop in the price of oil, a major export for Canada, dragged the economy into a brief recession last year. While the economy started 2016 on better footing, it is still struggling to gain momentum.
The number of small- and medium-sized businesses that were 30 days or more behind on their loans edged up to 1.07 percent from 1.02 percent, while those that were delinquent by at least 90 days held at 0.32 percent.
Both measures were up compared to a year ago, which suggests businesses are feeling more financial stress, Phelan added.
Reporting by Leah Schnurr, editing by G Crosse