(Reuters) - U.S. small businesses borrowed more money in January than they did a year earlier, signaling continued growth in the economy despite a spate of cold weather that has been blamed for weakness in many other indicators of activity.
The Thomson Reuters/PayNet Small Business Lending Index, which measures the volume of financing to small companies, rose to 117.2 in January, up 4 percent from a year earlier, PayNet said on Monday. The index was down from a nearly seven-year high in December, typically a strong month for borrowing as companies round out their budgets for the year.
A rise in the index is historically correlated with stronger U.S. economic growth a quarter or two in the future.
"It was unexciting growth but it was growth nonetheless," PayNet founder Bill Phelan said.
Small companies typically take out loans to buy new tools, factories and equipment, so more borrowing can be an early signal of increased hiring ahead.
The report added to signs of a thaw in an economy whose growth has been chilled by unusually harsh winter weather. Frigid temperatures hurt retail sales, industrial production, home sales and hiring early this year, though other data released late last week, including consumer sentiment and factory output in the U.S. Midwest, showed a bit of strengthening.
The signs of improvement may be welcome news for the Federal Reserve, whose new chair Janet Yellen plans to end the central bank's massive bond-buying entirely before the year is out unless the economy fails to improve as expected.
The U.S. economy grew at a 2.4 percent annual pace in the fourth quarter of last year, sharply slower than earlier estimated but still fast enough to chip away at unemployment.
A separate index released by PayNet on Monday showed loan delinquencies ticking down marginally toward near-record lows.
Delinquencies of 31-to-180 days in January slipped to 1.45 percent of all loans made, from 1.46 percent in December, according to the Thomson Reuters/PayNet Small Business Delinquency Index.
A measure of accounts overdue as a percentage of all loans hit a high of 4.73 percent in August 2009. The record low was 1.44 percent last October.
PayNet collects real-time loan information such as originations and delinquencies from more than 250 leading U.S. lenders.
Reporting by Ann Saphir in San Francisco; Editing by Leslie Adler