Feb 4 U.S. small businesses boosted borrowing in
December, pushing a broad lending index to its highest level in
nearly seven years and signaling that economic growth may
continue apace in the early part of this year.
The Thomson Reuters/PayNet Small Business Lending Index,
which measures the volume of financing to small companies, rose
to 121.6 in December from an upwardly revised 114.6 in the prior
month, PayNet said on Tuesday.
That was the highest level since March 2007, the data
showed, and was up 5 percent from a year earlier. A rise in the
index is historically correlated with stronger U.S. economic
growth a quarter or two in the future.
"We are fairly optimistic there will be some growth coming
at least from the small business portion of the economy," PayNet
founder Bill Phelan said. The rate of growth is "not too frothy,
and not too tepid either," he 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.
It's a good sign for the Federal Reserve, which is dialing
down its massive bond-buying program in a nod to stronger growth
and a rapid decline in the unemployment rate, which registered
6.7 percent in December.
The Fed, now chaired by Janet Yellen after Ben Bernanke's
two-term stint ended last Friday, plans to end the bond-buying
entirely before the year is out unless the economy does not
continue to improve as expected.
Other recent data have not been as rosy, including reports
Monday that showed U.S. manufacturing activity slowed sharply in
January on the back of the biggest drop in new orders in 33
Still, economists blame most of that weakness on frigid
weather, and expect a rebound in coming months.
The U.S. economy grew at a 3.2 percent annual pace in the
fourth quarter of last year, after growing at a 4.1 percent rate
in the prior quarter.
A separate index showed small businesses have begun taking
on slightly more risk, with delinquencies ticking up marginally
from record lows.
Delinquencies of 31 to 180 days in December ticked up to
1.47 percent of all loans made, from 1.46 percent in November,
according to the Thomson Reuters/PayNet Small Business
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.
(Reporting by Ann Saphir in San Francisco; Editing by Lisa