Aug 4 (Reuters) - U.S. small businesses pared borrowing in June, the Thomson Reuters/PayNet Small Business Lending Index showed on Monday, suggesting some caution on economic growth forecasts may be warranted.
The month-to-month decrease, to 120.6 from a downwardly revised 125.4 in May, was the index's second straight monthly decline, according to data released on Tuesday. The index is correlated with U.S. gross domestic product growth two to five months ahead.
Still, from a year earlier, the index was up 15 percent from the prior year, a fourth straight double-digit increase.
"We still think it's a pretty strong report," PayNet founder Bill Phelan said. "I'd expect GDP to be fairly robust and positive over the next quarter."
The U.S. economy grew at a strong 4-percent annual pace last quarter, data released last week showed, after contracting at a 2.1-percent annual pace in the first quarter.
Just how fast it grows this quarter will help determine when the Federal Reserve decides to begin raising interest rates, a move traders do not currently expect until mid-2015. A government report released Friday showed job growth cooled in July, and the unemployment rate edged up to 6.2 percent.
Meanwhile, small business loan delinquencies rose to their highest in more than a year, a separate report from PayNet showed, suggesting a rising number of borrowers are already finding themselves in over their heads.
Delinquencies of 31 to 180 days, PayNet's broadest measure of late loan payments, rose to 1.51 percent of all loans made, from 1.48 percent in May. Still, the index remains well below its high of 4.73 percent, in August 2009.
"Credit risk is still very manageable," Phelan said.