Small U.S. businesses increased borrowing for a second month in May, pointing to growth ahead for an economy still struggling to pull free from a recession that ended four years ago.
The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to small U.S. companies, rose to 115.1 from a downwardly revised 108.1 in April, PayNet said on Tuesday.
From a year earlier, the index jumped 9 percent, putting it within striking distance of the five-year high of 116 reached in December. The April figure was originally reported at 110.5.
Because small companies typically take out loans to buy new tools, factories and equipment, an increase in borrowing can be a prelude to new hiring. Historically, PayNet’s lending index has correlated to overall economic growth one or two quarters in the future.