The commercial paper market has shrunk 13 percent in the past month as U.S. companies struggle to raise short-term capital, according to data released on Thursday.

An ongoing squeeze on credit slashed $54.1 billion from the amount of commercial paper outstanding over the past week, Federal Reserve data showed, the fourth straight week of heavy declines.

Although the declines were decelerating, a breakdown of the figures indicated companies outside the financial sector were suffering, analysts said.

It would seem to suggest that the disruption has impacted firms not involved in the residential mortgage industry, said Marc Chandler, chief global currency strategist with Brown Brothers Harriman.

The one-month slump is the steepest in at least seven years. Changes to the data before that point make comparisons difficult, but many analysts describe the situation as unprecedented.

Commercial paper is an unsecured debt instrument with maturities shorter than 270 days. It is issued by companies for basic near-term financing needs.

The financial sector's troubles stem from high-risk subprime mortgages, which were repackaged and resold, making it difficult to determine which companies are most exposed to soured home loans.

Without that transparency, investors have been reluctant to buy commercial paper from any issuer with potential links to subprime.

U.S. mortgage foreclosures rose to an all-time high in the second quarter, an industry report showed on Thursday.

Outstanding commercial paper now totals $1.925 trillion, its lowest level since November and off sharply from an all-time high of $2.225 trillion hit in late July.

Issuance of asset-backed commercial paper was again hardest hit, since the sector has the greatest potential exposure to mortgages. Asset-backed commercial paper outstanding fell $31.3 billion, although the pace of declines appeared to be abating. The prior week had a $59.4 billion drop.

What happens next depends on whether the crisis deepens from current levels, said Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co.

If conditions stabilize, the commercial paper market will begin to expand again, in line with the economy. If not, it will continue to contract and put pressure on obligors throughout the world.