OTTAWA, Oct 16 (Reuters) - Lending to Canadian small businesses rose in August on stronger demand in the construction and retail sectors, data showed on Monday, suggesting corporate spending could help sustain broader economic growth down the line.
The PayNet Small Business Lending Index rose to 121.2 from a downwardly revised 120.8 in July. Medium-sized businesses saw a bigger pick up, with the index climbing to 246.3 from 235.6.
Retail companies helped drive small business lending, with the sector rising to 194.2 from 188.1, while the construction sector rose to 146.4 from 145.3.
While the annual growth rate of lending to small businesses slowed to 1 percent from 2 percent in July, that points to a more sustainable pace of gains for companies over the long run, said PayNet President Bill Phelan.
It was also in line with wider economic growth that is expected to cool in the later half of 2017 after a hot first half.
"We're at the early stages of this expansion cycle for investment," said Phelan.
That means delinquency rates will likely not remain as low as they are as corporate winners and losers eventually shake out, said Phelan.
For now, companies' financial health remained strong, with the share of small firms that were 30 days or more behind on payments falling to 0.92 percent from 0.97 percent. Those that were 90 days or more behind held steady at 0.31 percent.