Daily News: March 31, 2015

Phoenix Survey: Higher Expectations for Domestic Commercial Lending

From the first quarter Phoenix Management Lending Climate in America Survey, results show increased expectations for domestic commercial lending over the next six months. In Q1/15, domestic lending expectations increased in all categories when compared to Q4 2014. Corporate lending, middle market Lending, and small business Lending saw at least a four percentage point gain to each of their diffusion indexes, with the average domestic lending diffusion index increasing by more than six percentage points.

Lenders also showed increasing confidence in how they expect the U.S. economy to perform beyond the next six months with a grade point average of 2.39, which is the highest grade point average since Q2/11. This shift seems to indicate a more optimistic outlook than we have seen in recent quarters.

Lenders have also shown a change in regard to the factors with the strongest potential to affect the near term economy. Sixty-five percent of respondents believe that unstable energy prices could have the strongest impact on the economy in the next six months, up fifteen percentage points from Q4 2014. This dramatic increase has certainly been effected by recent low oil prices. Lenders have been split between low oil prices positive effect on businesses and consumer spending and the negative effect on the energy companies themselves. While lenders appear to be cautious with the effects of low oil prices, the increasing confidence in domestic lending and the U.S. economy’s expected performance beyond the next six months seems to be unaffected.

“The results of our survey reveal lenders expectations that oil prices will begin increasing during the 2nd and 3rd quarters. While we expect to see volatility in this sector, and the associated positive impact on corporate profit margins and consumer spending, lenders remain cautious in their short-term outlook and we are observing an increase in their expectation to relax loan structures as they vie for business in this competitive marketplace,” says Michael Jacoby, senior managing director and Shareholder of Phoenix.

To see the full results of Phoenix’s Lending Climate in America Survey, click here.