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U.S. Small Business Investment Stall Continues

November 03, 2016, 07:10 AM
Filed Under: Economy

The September 2016 data release of the Thomson Reuters/PayNet Small Business Lending Index (SBLI), which is a leading economic indicator of GDP, decreased to 128.9 in September from 132.8 in August.
Compared to the September 2015, the SBLI is down 7%, the fourth consecutive month of year-over-year decreases and seventh in the last 12.
“Investment has remained muted as the election cycle unfolds and U.S. small businesses wait to see the results,” notes William Phelan, president of PayNet. “This still appears to be a lull in economic growth rather than a sea change.”
Industries in general are trending more negative signaling more slowdown ahead. Agriculture (-15.4%), Transportation (-12.5%), Mining (-9.4%), and Accommodation & Food (-7.7%) lead the decliners.

Financial health remains strong because small businesses are not investing or taking risks. The Thomson Reuters/PayNet Small Business Delinquency Index (SBDI) remained flat at 1.32%. This is no change from the prior month and only 13 basis points above last year's past dues. Delinquencies rose moderately in Transportation (+1 bps) and Retail (+2 bps) while declining in Agriculture -3 bps) and Healthcare (-3 bps).

“With the election and open policy issues impacting small businesses’ investment decisions, they are clearly hunkering down and reacting with more fear than desire to expand, “ Phelan added.

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