The March 2017 release of the Thomson Reuters/PayNet Small Business Lending Index (SBLI) continues to show small businesses cool towards real expansion as the Index increased just 4% to 134.0 from 128.9 in February 2017. The SBLI is down 1% from March 2016.
“The environment remains wait-and-see, which is certainly an improvement from the middle of 2016 when small businesses pulled-back,” states William Phelan, president of PayNet, Inc.
Arts, Entertainment & Recreation continues to grow at a double-digit rate year-over-year (13.6%). Administrative & Waste Services and Construction also continue to benefit from the generally constructive domestic economy with year-over-year growth rates of 4.8% and 4.3%. Accommodation & Food Services has experienced revived growth after a year in the doldrums with 2.1% month-over-month increased investment.
Transportation (-15.4%), Agriculture (-7.8%), and Mining, Oil, & Gas (-8.9%) are three of the weakest sectors that are starting to bounce back, although all three are still decidedly in the negative territory. The rate of contraction is accelerating in Healthcare (- 13.1%), largely due to continued political uncertainty.
Small business financial health remains positive. The Thomson Reuters/PayNet Small Business Delinquency Index (SBDI) remains flat in March 2017 at 1.34% from February 2017. Construction (1.93%) and Transportation (1.73%) exhibited the highest delinquency rates. All the industry segments had higher delinquencies year-over-year with the greatest increases in Transportation (+43 bps), Retail (+20 bps), and Agriculture (+16 bps).
Small business default trends remain benign and the rate of increase has been moderating. The PayNet Small Business Default Index (SBDFI) registered 1.9% in March 2017 compared to 1.6% in March 2016. The highest default rates exist in Mining (4.6%), Transportation (4.5%), and Information (2.7%).
“As time goes on and uncertainties become a bigger issue, small private companies become more confirmed in their need for details,” Phelan added. “The healthcare sector has nearly thrown in the towel on further investment.”