U.S. small business borrowing up 16% in September from last year
(Reuters) – U.S. small business borrowing rose last month from a year earlier, an index that tracks lending showed on Tuesday, signaling moderate growth ahead for the economy as a whole.
The Thomson Reuters/PayNet Small Business Lending Index, which measures the volume of financing to small companies, registered 109.7 in September, down 6 percent from August but up 16 percent from the same month a year earlier.
The differing number of business days in each month accounts for much of the change, PayNet founder Bill Phelan said, who looks to three-month rolling averages for a better reading on the underlying trend. That average, he said, is on a slow, upward path, with September registering an 11 percent rise, compared with a 7 percent gain at the start of the year.
“We’re back to consistent growth,” Phelan said in an interview. “Boring is beautiful here.”
Historically, PayNet’s lending index has correlated to overall economic growth one or two quarters in the future. Small companies typically take out loans to buy new tools, factories and equipment, so more borrowing can be an early harbinger of increased hiring ahead.