OTTAWA (Reuters) - Borrowing activity by Canadian small businesses fell for the fifth consecutive month in April, data from PayNet showed on Wednesday, pointing to an economy that is struggling to regain momentum after the steep drop in oil prices over the past two years.
PayNet's Canadian small business lending index declined to 117.5 in April from 121.7 the month before. A measure of lending to medium-sized businesses also fell to 209.4 from 213.5.
Monthly declines were seen in every industry except the wholesale sector, which edged up to 164.2 from 162.4. The picture was similarly bleak across regions, with only Manitoba rising on the month.
"What we're looking at is slower GDP and probably lower credit quality for the future in Canada," said PayNet President Bill Phelan.
"The contagion is broadening and impacting the smallest companies, which are the leading bellwethers for where GDP is going," said Phelan.
Canada was in a mild recession last year as the oil-exporting country was hit by the drop in commodity prices. While growth was relatively strong at the start of 2016, economists and policymakers expect the second quarter will slow, partly due to the impact of last month's wildfires in Alberta.
The 30-day delinquency rate for small businesses edged up to 1.17 percent, the highest level in four years. The amount of loans that were more than 90 days behind on payments dipped to 0.31 percent, but Phelan said he expects to see that move higher in the coming months.
Reporting by Leah Schnurr; Editing by Bill Rigby