Canadian Private Businesses Continue Contraction

PayNet reported the PayNet Canadian Small Business Lending Index (CSBLI) decreased 3% from 115.9 in November 2017 to 112.6 in December 2017. Compared to the same month one year ago, the CSBLI is down 6%.

“Canadian small businesses closed 2017 with lower investment in property, plant and equipment despite ending the year at all-time lows in short-term delinquencies,” said PayNet President William Phelan.

Year over year, sectors experiencing growth were Transportation (23%), Construction (15%) and Other (17%). Accommodation and Food (-6%) remained weak in recent months although the severe weakness of earlier this year seems to have abated. Agriculture (-5%), Manufacturing (-4%) and Wholesale (-7%) also saw declines in loan originations. At a provincial level, origination trends were down in December versus November in Ontario (-0.2%), Quebec (-1%) and Saskatchewan (-2%) relative to year-over-year growth of 6%, 5% and 9%, respectively.

Robust financial health conditions are reflected in the PayNet Canadian Small Business Delinquency Index, which shows declining delinquency levels in most industries over the last year and over the last three months. Overall, loans 30 days past due decreased again from 0.86% in November to 0.82% in December. Compared to December 2016, delinquency decreased from 1.10%, marking the ninth consecutive year-over-year decrease. Every industry PayNet tracks has an overall delinquency level at least 30% below 2005 to 2006 levels. Only Manufacturing and Other experienced an uptick in delinquencies of 0.20% and 0.01%, respectively.

Over the last three months, overall delinquency levels have declined in every province and region in Canada, and serious delinquency levels have declined in every province and region with the exception of Saskatchewan, where they have held steady.

“Canadian small businesses are well-positioned to borrow and invest in 2018,” added Phelan. “Next month’s release will show if this decrease is a pause or part of a longer trend.”

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Terry Mulreany
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