Aug 4 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
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.
PayNet collects real-time loan information such as
originations and delinquencies from more than 250 leading U.S.
(Reporting by Ann Saphir; Editing by David Gregorio)