Small Business Lending Index Suffers Largest Y/Y Downturn Since 2009
JUN 2, 2016 - 6:53 am
The April 2016 data release of the Thomson Reuters/PayNet Small Business Lending Index (SBLI) decreased for the second consecutive month, falling 5% to 129.0 in April 2016 from 135.1 in March 2016. Compared to the same month one year ago, the index is down 8%, the largest year-over-year decrease since December 2009. The trend line has fallen to a 1% rate increase from 3%.
“Flat line best describes current small business investment activity,” said William Phelan, president of PayNet. “Small businesses abruptly took a bearish view of the economy at the end of 2015 and, while not an inflection point, this release is concerning.”
The data release also said that sectors that carried the economy are slowing while few growing sectors are filling the gap. The growth sectors show a slowdown trend, with retail down to 5.4% from 6.5%, construction at 8.5% from 9.5% and agriculture falling by 18% as its recession continues. Transportation, education and manufacturing are effectively in contraction, while finance and arts are in maintenance mode.
Financial health of small businesses has not changed materially in this release and loans past due stand exactly at the same levels they did in April 2015. The Thomson Reuters/PayNet Small Business Delinquency Index (SBDI) 31-90 days past due increased two basis points to 1.23% in April 2016 from 1.21% in the prior month. Transportation delinquency is up eight basis points to 1.37%, its 14th consecutive month of increase and its highest level since March 2013. Construction delinquency is up six basis points to 1.85%, its seventh consecutive month of increase and its highest level since February 2013. Agriculture (one basis point), retail (two basis points) and Healthcare (three basis points) round out the sectors that had increases in delinquencies.
“While the trend for small business investment is moving towards negative, it is not there yet on an absolute basis and we could see this flat line continue for some time,” said Phelan.
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