Economy, Small Business

Economic Data Roundup (05/11/2016)

5/11/16 12:00 PM

iStock_000009946822_Small.jpgThere were not any major economic data releases this morning so we will instead take a look at current credit conditions for an important component of the U.S. economy: small business. Indeed, a study out earlier this year from the Federal Reserve Bank of New York found that cash flow is frequently cited as a top business challenge for small firms in America. It is therefore unsurprising that many of these entities often have to turn to creditors to fill their funding gaps. Loan approval rates are relatively high and paying back the debt does not appear to be a significant challenge for many small businesses because delinquency rates remain near all-time lows. However, the latest reading on the small business lending index from Reuters and PayNet suggests that overall demand for credit has declined recently. Specifically, the index fell in March (lagged) to 135.3, the 6th sequential decline in the past nine months. Bill Phelan, president of PayNet, added that “There's no bullish sentiment. Eleven of the 18 sectors PayNet tracks are on a downward trend. Small business owners are simply not willing to spend big in hopes of growth.” Similarly, the responses from owners surveyed last month by the National Federation of Independent Business (NFIB) suggest that although interest rates remain low, the “prospects for putting borrowed money profitably to work have not improved enough to induce owners to step up their borrowing and spending.”

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Sources: FRBNY, Wells Fargo, Reuters, PayNet, Biz2Credit

Post author: Charles Couch