WASHINGTON — Demand for business loans increased in the fourth quarter as economic growth accelerated, according to a Federal Reserve survey of senior loan officers at banks.
Seventeen of 56 banks reported stronger demand among companies with $50 million in annual sales or more, according to the survey released Monday in Washington, while six reported weaker demand. Demand among small businesses for loans increased by the most in any quarter since 2005.
Economic growth accelerated last quarter to a 2.8 percent annual rate, the fastest pace since the second quarter of 2010. The expansion still isn’t strong enough to push down an unemployment rate that has been at 8.5 percent or higher for 34 consecutive months, prompting the Fed last week to say its benchmark interest rate will be kept near zero until at least the end of 2014.
While business demand for borrowing increased, banks reported “little change in standards on commercial and industrial loans but a continued easing of pricing terms,” the survey said. The pickup in business lending was a reversal of the previous survey, released in November, in which more banks reported a drop than an increase in demand.
The economy will add 145,000 jobs in January, according to the median estimate of a Bloomberg News survey of economists ahead of a Feb. 3 Labor Department report, down from a gain of 200,000 the previous month. The unemployment rate will probably remain unchanged at 8.5 percent, according to the survey.
“Recent economic data suggests that growth improved in the fourth quarter of 2011, which we believe reflects the positive impact of the Fed’s easing that was initiated in late 2010,” Mike DeWalt, director of investor relations at Caterpillar, said on a conference call with analysts last week. “It’s our view that the full impact of those actions hasn’t materialized yet and that it will contribute to continued growth in 2012.”
The survey of loan officers at 56 domestic banks and 23 U.S. branches and agencies of foreign banks was conducted from Dec. 21 to Jan. 10, the Fed said. The report doesn’t identify respondents.
“Lending standards and demand for loans to purchase residential real estate were reportedly little changed,” the report said.
Mortgage rates near record lows have failed to revive the housing market after five years of price declines. The average 30-year fixed rate mortgage was 3.98 percent as of Jan. 26, according to a Freddie Mac index. The index reached the lowest level in 40 years on Jan. 19, when rates fell to 3.88 percent. The yield on the five-year Treasury reached a record low Monday of 0.72 percent.
Bank of America and Citigroup are among lenders that may find it more difficult to boost profits and capital after the central bank extended its pledge to keep rates low from a previous date of at least the middle of 2013.