Downshift in Canadian Small Business Investment, Reflecting Tenuous Nature of Economic Expansion

12/20/2018
Canadian Small Business, Canadian Investment

TORONTO – Dec. 20, 2018 – PayNet, the leading provider of small business credit data and analysis, reports that the PayNet Canadian Small Business Lending Index (CSBLI) decreased 3% from 122.2 in September to 119.0 in October 2018. The index is up 3% year-over-year in October, marking the sixth straight month of year-over-year increases after 10 months of decline.

“PayNet’s latest release of commercial credit trends shows a slowdown in investments by private businesses last month and slightly worsening finances,” said PayNet President William Phelan. “The small businesses lending environment improved markedly in the first half of 2018, but has hit a speed bump in recent months.”

Compared to October 2017, lending increased across all industries except the Other composite industry (-2.0% Y/Y). Gains were led by Transportation (+20.0% Y/Y) which saw lending rise to its highest level in over 11 years, and Accommodation & Food Services (+18.6% Y/Y) which posted its seventh consecutive double-digit annual gain. Regionally, lending fell in Saskatchewan (-2.9% Y/Y), but rose in all the other major regions, with double-digit gains in Atlantic Canada (+17.2% Y/Y), Alberta (+11.9% Y/Y) and Manitoba (+11.8% Y/Y).

The PayNet Canadian Small Business Delinquency Index (CSBDI) 31-180% increased 2 basis points from 0.99% in September 2018 to 1.01% in October 2018. Compared to one year ago, delinquencies increased 13 basis points. This is the third consecutive year-over-year increase after 16 months of year-over-year decreases. Compared to October 2017, delinquencies increased in five of the nine major industries, led by Professional Services (+59bp Y/Y) and Manufacturing (+54bp Y/Y). On an annual basis, delinquencies rose in five of the seven major regions, including Manitoba (+27bp Y/Y) which posted its fifth consecutive double-digit increase compared to year-ago levels, and Ontario (+38bp Y/Y) which saw its sharpest year-over-year increase in nearly nine years. 

“The combination of lower investment levels and rising delinquencies in this month’s report is not great news for the Canadian economy, but time will tell whether this is a temporary pause or evidence of a further pullback,” added Phelan. “Slowing investment from small businesses means that Main Street is likely to contribute less to Canadian GDP in the next quarter.”

 

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.