Canadian Small Businesses See Sustained Growth, According to PayNet

10/1/2018
Canadian Small Business, Canadian Investment

TORONTO – Oct. ##, 2018 – PayNet, the leading provider of small business credit data and analysis, reports that the PayNet Canadian Small Business Lending Index (CSBLI) decreased 3.2% from 126.2 in July 2018 to 122.1 in August 2018, marking the second consecutive monthly decline after increasing in each of the previous six months. However, the CSBLI is up 5.0% year-over-year, its fourth consecutive gain after 10 months of decreases on an annual basis.

“Small businesses are sustaining the growth of the Canadian economy with a solid increase in investment last month,” said PayNet President William Phelan. “While larger companies continue to right-size, small companies remain the engine of growth, with expansion occurring across almost all major industry groups and provinces. The strength of this broad-based investment will likely carry the momentum forward and lead to continued growth in the Canadian economy.”

Compared with August last year, all major industries experienced an increase in lending except Wholesale Trade (-2.5% Y/Y). Both Transportation (+21.9% Y/Y) and Accommodation & Food (+18.7% Y/Y) posted double-digit gains on an annual basis. Transportation is a particularly hot sector, as August marks the 14th consecutive month of double-digit increases year-over-year. On an annual basis, lending increased across all major regions except Saskatchewan (-6.7% Y/Y). In August, Atlantic Canada (+17.1% Y/Y) saw its fastest year-over-year growth since January 2011.

The PayNet Canadian Small Business Delinquency Index (CSBDI) 31-180% increased three basis points from 0.96% in July 2018 to 0.99% in August 2018. Delinquencies increased seven basis points on the year, marking the first increase on an annual basis in 17 months. Compared to year-ago levels, delinquencies fell in the majority of industries, led by Construction (-18bp Y/Y), Accommodation & Food (-12bp Y/Y), and Retail (-7bp Y/Y). However, Manufacturing (+115bp Y/Y) saw year-over-year delinquencies rise at the fastest rate in more than a decade, while delinquencies in Wholesale Trade also saw a notable jump in August (+41bp Y/Y) and have risen for five straight months on an annual basis. Regionally, growth in delinquencies was mixed, with roughly half of the major provinces seeing year-over-year increases and the other half experiencing declines. Notably, Quebec (-18bp Y/Y) posted its 17th consecutive double-digit decline on an annual basis. 

“Though credit risk ticked up this month, it presents little threat to the current expansion cycle, as the absolute level of risk remains very low,” added Phelan. “While not yet fully humming, the private company sector remains well positioned to propel the Canadian economy over the next few quarters, as investments by multiple industry groups and across major regions of the country sets a great baseline for future economic expansion. Once larger businesses get into investment mode, the economy will strengthen and this expansion cycle will become even more durable.” 

 

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.