Business confidence in Canada continued to improve in the fourth quarter of 2019 as energy-sector activity showed signs of bottoming out while concerns over trade tensions eased, according to new survey results from the Bank of Canada.
The central bank's Business Outlook Survey indicator edged up to 0.74 from a revised reading of 0.42 in the third quarter of 2019. Business sentiment and expectations for future sales growth were both "positive," the bank said.
Indicators of business sentiment remained weak in the Prairie provinces amid slower sales growth in the past 12 months, as issues in the energy sector spread to other industries.
"Firms see some signs that energy-sector activity may have bottomed out as production limits are gradually removed and some progress is made on pipeline capacity," the central bank said.
Export prospects were supported by demand from foreign markets, particularly the U.S., although some businesses expressed worries over policies that favored their U.S. competitors.
Canadian companies said they were less keen on increasing investment spending in the last quarter of 2019 compared to the previous survey, with many businesses choosing to invest in technology to increase efficiency. Meanwhile, Hiring intentions increased, particularly in Quebec and British Columbia.
A majority of businesses continue to expect inflation to be in the lower half of the central bank's inflation-control target range of 1% to 3% over the next two years, the BoC said.
The Bank of Canada also released the results of its survey of consumer expectations for the fourth quarter of 2019, showing a slight decline in the expected inflation rate for the year ahead, to 2.2% from 2.4%, and for the next five years. Consumer expectations for wage growth and household income were steady in the fourth quarter.