Trade War to Subdue Hiring Next Year, Data Shows
Canadians seeking stable employment may face challenges in the upcoming year due to ongoing trade tensions. According to a recent report from the Bank of Canada, many businesses are adopting a cautious stance, causing the job market to remain subdued.
Trade War Impact on Employment and Hiring
The Bank of Canada’s Business Outlook Survey for the third quarter of 2025 reveals that a significant number of companies expect weak demand for their products and services. This sentiment suggests that hiring initiatives may be put on hold.
- Most firms indicate they do not plan to expand their workforce over the next 12 months.
- Tariff uncertainties and reduced demand are major factors influencing this cautious approach.
- As many businesses are not anticipating sales increases, they are hesitant to commit to new hires.
Spillover Effects of the Trade War
The survey highlights several spillover effects resulting from the trade conflict. These effects include:
- Reduced consumer spending on services like renovations and corporate travel.
- Weak sentiment in the housing sector is affecting demand for related businesses.
- Companies are seeking alternative trading partners due to heightened costs associated with U.S. tariffs.
Wage Growth and Employment Statistics
The wage outlook is also dampened. Businesses expect to increase salaries by an average of 2.3% over the next year, a decrease from 2.9% the previous year. The unemployment rate in Canada stood at 7.1% in September, having risen from 6.9% in June, indicating a tightening labor market.
Specific Industries at Risk
Although many businesses plan to halt hiring rather than resort to layoffs, sectors such as aluminum and steel are particularly vulnerable. The Bank of Canada reported:
- Firms in these industries face significant layoffs due to U.S. tariffs.
- Canadian exporters are struggling with weak market outlooks in the steel and aluminum sectors.
- While some have redirected exports to Europe, this approach is viewed as unsustainable long-term.
Government Efforts to Mitigate Trade Tensions
Prime Minister Mark Carney continues negotiations with U.S. President Donald Trump, aiming to reduce or eliminate tariffs that negatively impact Canadian businesses. The outcome of these discussions will be critical in shaping the employment landscape over the next year.
