PayNet Sees Canadian Small Businesses Settle into Steady Growth

9/1/2018
Canadian Small Business, Canadian Investment

TORONTO – Sept. ##, 2018 – PayNet, the leading provider of small business credit data and analysis, reports that the PayNet Canadian Small Business Lending Index  (CSBLI) increased 6% in July 2018 to 125.7 compared to 118.4 the same month a year ago, marking the third straight month that there has been a year-over-year increase after 10 months of year-over-year decreases. The CSBLI decreased 2% from 127.9 in June 2018 to 125.7 in July 2018, marking the first sequential monthly decrease after increasing for the previous six months. 

“While not completely into expansion mode, Canadian businesses are moving in the right direction,” said PayNet President William Phelan. “Canadian small business growth is not accelerating like it is in the U.S., but we see it achieving a plateau after climbing out of over a year of contraction. Steady investment by small businesses bodes well for further growth for the Canadian economy as a whole.”

Compared with July 2017, the majority of industries experienced positive growth in lending, with four posting double-digit gains: Transportation (+26.6% Y/Y), Accommodation & Food (+25.8% Y/Y), Manufacturing (+17.7% Y/Y), and Retail (+12.3% Y/Y).  Alberta (+13.5% Y/Y) and Atlantic Canada (+13.1% Y/Y) led growth on a year-over-year basis while lending in Quebec (+10.3% Y/Y) and Ontario (+5.5% Y/Y) climbed to all-time highs.

The PayNet Canadian Small Business Delinquency Index (CSBDI) 31-180% increased 1bp from 0.95% in June 2018 to 0.96% in July 2018. As compared to one year ago, delinquencies decreased 1bp. This is the 16th consecutive year-over-year decrease after year-over-year increases in each of the prior 25 months. Compared to year-ago levels, delinquency levels decreased in five industries, including Construction (-38bp Y/Y) which saw its 12th straight year-over-year decline. However, Manufacturing delinquencies rose 83 basis points on the year, its sharpest increase since April 2016, and delinquencies in Professional Services (+15bp Y/Y) increased on an annual basis for the first time in 17 months. Year-over-year, delinquencies decreased in the majority of regions, led by Quebec (-25bp Y/Y), which fell to an all-time low.  

“Canadian small businesses have shown consistent investment growth, and the addition of one more solid month will help drive economic expansion,” added Phelan. “While credit risk remains moderate, it is quietly creeping up and bears watching. For now, steady investment positions businesses for more expansion, while this increase in investment also means lenders should plan for a rise in credit losses.”

 

About PayNet, Inc. Canada
PayNet, Inc. Canada is the premier provider of risk management tools and market insight to the commercial credit industry, collecting real-time loan information from leading Canadian lenders and turning it into actionable intelligence. The company's proprietary database — updated weekly — is a growing collection of commercial loans and leases, worth over $92 billion. Using state-of-the-art analytics, PayNet converts raw data into real-time market intelligence and predictive information that subscribing lenders use to manage risk, lower operating costs, originate more loans and improve their business strategy. For more information visit paynet.ca and sbinsights.ca.