US Small Business Borrowing Rises in June

Borrowing by U.S. small businesses jumped to a record in June, an index released Wednesday showed, signaling tighter labor conditions that may help build the case for the Federal Reserve’s first interest-rate increase in nearly a decade.   

The Thomson Reuters/PayNet Small Business Lending Index rose to 143.3 in June from an upwardly revised May reading of 131. It was the highest level since the index was launched in 2005, and was up 19 percent from the level a year earlier.

The increase is “a signal of some fundamental, underlying strength in private companies that is really not being registered anywhere else,” PayNet founder Bill Phelan said. “Job openings are going to be harder to fill. … (Companies) will have to raise compensation to attract workers.”

Such signs are exactly what Fed officials have been waiting for, as they gauge the right time to lift short-term borrowing costs from near zero, where they have been for 6-1/2 years.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza