OTTAWA (Reuters) - Borrowing activity by Canadian small businesses fell for the fourth month in a row in March, data from PayNet showed on Thursday, suggesting firms' appetite for investment remained weak and boding poorly for economic growth.
PayNet's Canadian small business lending index tumbled to 119.1 in March from 124.3 the month before. An index of lending to medium-sized businesses similarly slumped to 206.5 from 225.0.
Canada's economy has been struggling to gain momentum since the plunge in oil prices put the country in a brief recession last year.
"It's almost a contagion occurring," said PayNet President Bill Phelan of the dampening effect on the economy.
"It's becoming more prevalent among a broader swath of the economy."
The Bank of Canada said on Wednesday that although growth looks to have picked up in the first quarter, business investment and intentions remain disappointing.
By region, only Ontario and British Columbia saw activity improve. The two provinces have had relatively strong economies compared to regions that are tied to oil production. Lending in Alberta, where the country's oil sands are located, was down 21 percent compared to a year ago.
By industry, the manufacturing sector continued its trend of modest monthly increases but other sectors pulled back, including agriculture and retail.
The 30-day delinquency rate edged up to 1.09 percent, while the number of companies that were more than 90 days behind on their loans held steady at 0.32 percent.
The regional effect was visible there as well, with Alberta seeing the biggest increase in the 30-day delinquency rate, up 0.4 percent from a year ago.