Market Overview

Canadian Private Businesses Poised for Turnaround, According to PayNet

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Increased investment continues in industries and provinces

PayNet,
the leading provider of small business credit data and analysis, reports
that the PayNet
Canadian Small Business Lending Index
(CSBLI) increased 4% from
121.9 in April 2018 to 126.7 in May 2018, marking the fifth consecutive
month of growth. Compared to the same month one year ago, the index is
up 4%.

"This latest release confirms the past year to be more of a pause,
rather than a major change in the Canadian business cycle," said PayNet
President William Phelan. "On a year-over-year basis, the index showed
positive growth after 10 months of decreases."

Borrowing and investment were up year-over-year in Transportation (3%),
Retail (2%) and Accommodation and Food (2%), while Professional Services
(-4%) was down. All other industries moved less than 1%. Six of the
seven provinces were up or flat, with Atlantic Canada (2%) and British
Columbia (2%) seeing the highest year-over-year increases. Only
Saskatchewan (-2%) was down during that period.

Industry sectors and provinces are showing improvement in credit
quality. According to the PayNet
Canadian Small Business Delinquency Index
(CSBDI), loans 30 days
past due or more again held steady at 0.93% from April to May this year.
Compared with May 2017, delinquency decreased 16 bps from 1.09%, marking
the fourteenth consecutive year-over-year decrease after 25 months of
year-over-year increases. Month-over-month, Accommodation and Food (-19
bps) and Retail (-7 bps) showed the largest delinquency decreases. The
most significant delinquency increases were in Manufacturing (6 bps) and
Professional Services (4 bps). Quebec (-5 bps) showed a decrease in
delinquency, but delinquency increased in Ontario (2 bps) and
Saskatchewan (4 bps).

"Prior to 2017, Canadian businesses invested aggressively to take
advantage of perceived opportunities," added Phelan. "While they may
have overreached a bit, they have self-corrected by holding back on
investment. Decreasing investment combined with improving credit quality
shows that Canadian businesses needed to regroup. Now with those
consolidations behind them, they are poised for a turnaround."

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.

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