The new year is poised to be another challenging environment for jobseekers as a quarter of hiring managers surveyed say they are “cautious” about their ability to hire more workers in 2026, according to newly released data.
This comes after 2025 marked a difficult job market for Canadians as the trade war and tariffs hit the economy, which led to layoffs and reduced hiring across many sectors.
“Canadian businesses are entering 2026 with cautious optimism, but expect to face several hiring challenges,” Express Employment Professionals said in a survey report.
Express Employment Professionals, an international recruitment and staffing firm, on Monday released the results of its Harris Poll survey, which asked just over 500 Canadian hiring managers in November about their outlook for the first six months of 2026.
Survey respondents were asked to select from a list of “positive” and “negative” terms, and choose which ones best described how they felt about the year ahead.
Sixty-seven per cent of respondents used positive terms like “optimism” and “confident” to describe their hiring outlook. But their overall positivity is down from 71 per cent a year earlier, according to the results.
Nearly half of respondents, 47 per cent, used negative terms, including 25 per cent who selected the term “cautious.”
These hiring managers who are cautious heading into 2026 aren’t alone, as the Bank of Canada described a similar outlook following the final interest rate announcement of 2025.
In a summary of its Dec. 10 interest rate decision, the Bank of Canada said its members agreed that “uncertainty remained high” heading into 2026 and they will “remain cautious in interpreting incoming data given recent volatility.”
“They (governing members) expected fourth-quarter GDP to be soft, with increases in consumption, housing activity and government spending offsetting weakness in business investment and net exports,” the Bank of Canada said in its summary.
The bank’s summary was released on the same day Statistics Canada released the October GDP report, which showed that the economy shrank by 0.3 per cent.
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In order for the job market to grow, the economy, in theory, would also need to grow, which a member of the Bank of Canada touched on near the end of November.
Speaking in Quebec on Nov. 19, the central bank’s external deputy governor, Nicolas Vincent, said the best way to tackle the affordability crisis is to raise the incomes of Canadians by making the economy more productive.
“Deep down, Canada’s affordability problem is really a productivity problem.… To make things more affordable, we need to raise our income. And the way to grow our income is by increasing productivity,” Vincent said in his speech.
“Years of weak business investment means productivity in Canada is lower than it could be. When productivity is lower, wages don’t rise as quickly.”
For now, the Express Employment Professionals survey data suggests that necessary boost in productivity may not be happening soon enough for some businesses.
Fewer than half of companies participating in the survey (44 per cent) plan to increase their headcounts in the first half of 2026. That’s down from 51 per cent a year earlier, according to the report.
In addition, 10 per cent of companies plan to decrease their workforce, which could mean layoffs or not replacing those who retire.
Forty-two per cent of businesses said they plan to keep their headcount mostly unchanged in early 2026.
One of the main reasons businesses may be taking a wait-and-see approach to hiring now, and heading into 2026, could be the uncertain outlook for trade relations with the United States.
“Members agreed that the upcoming review of the Canada-United States-Mexico Agreement (CUSMA) was a significant risk. The uncertainty leading up to and during negotiations would likely weigh on business investment,” the Bank of Canada said in its summary.
This means that a lot of Canada’s economic future could be determined in the coming weeks and months as the CUSMA negotiations unfold.
If there is a renewed or improved trade deal, businesses may feel more confident investing in growth and expansion — which could mean hiring more workers.
The opposite could also unfold, where businesses become more impacted by tariffs, which could potentially lead to more layoffs.
What could help potential candidates stand out to hiring managers may be to add to their arsenal of skills and qualifications.
Nearly a third of companies surveyed (29 per cent) reported having open positions they haven’t been able to fill.
Forty-nine per cent of this group said the applications they did receive for those vacant roles lacked relevant experience, which is up from 45 per cent a year earlier. Meanwhile, 47 per cent cited a lack of hard skills from applicants and 44 per cent said it was a lack of soft skills.
These trends suggest one of the biggest challenges for hiring managers isn’t just incentives like pay and benefits, but also the skills gap, the report said.
In November, Canada’s unemployment rate fell to 6.5 per cent from 6.9 in October. Although this was seemingly good news, most of the hiring was in part-time roles and youth.
The trade war has already led to thousands of jobs lost in Canada, especially in manufacturing, with Algoma Steel announcing on Dec. 1 that nearly 1,000 workers were being let go as a direct result of tariffs.
The December report on Canada’s job market and unemployment will be released by Statistics Canada on Jan. 9, 2026.
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