Affected by multiple factors such as trade uncertainties with the US, tariff pressures, and the accelerated penetration of artificial intelligence, Canadian companies are showing a markedly cautious outlook on hiring in the first half of 2026. Multiple recent surveys and economist analyses indicate that while companies haven’t completely “hit the brakes,” they are collectively cooling down their workforce expansion, and the job market is transitioning from a previously tense state to a more rational and prudent adjustment period.
According to the Toronto Star, a nationwide survey released on December 29 by human resources agency Express Employment Professionals indicates that only 44% of Canadian businesses plan to increase their workforce in the first half of 2026, significantly lower than the 51% in the same period last year. Meanwhile, approximately 42% of companies plan to maintain their current workforce size, while another 10% anticipate job cuts.
The survey, covering key industries such as education, construction, retail, healthcare, and finance, and involving over 500 hiring managers, is highly representative.
A spokesperson for the agency, Daisy Kaur, stated that the current hiring environment is more of a “slowdown” than a “freeze.” She pointed out that many companies are still hiring, but with a greater emphasis on precise matching and cost control, rather than the “hire first, worry later” strategy of the past few years. Employers are generally more focused on candidates’ multi-skilled backgrounds and whether the position can truly bring long-term value to the company.
From a macroeconomic perspective, trade uncertainty remains a significant variable affecting business confidence. Shelly Kaushik, senior economist at BMO, analysed that tariff risks related to the United States have had a particularly pronounced impact on Canada’s automotive, steel, aluminium, and lumber industries. These sectors not only face rising export costs but also job losses due to delayed investment. She pointed out that trade policy uncertainty will gradually transmit to the broader job market through business investment intentions, consumer confidence, and capital expenditure.
The survey also revealed that the primary reason for companies reducing or cautiously hiring is cost control, followed by the impact of tariffs, weakening market demand, and the application of artificial intelligence.
Notably, among companies planning layoffs, 23% explicitly cited automation and AI as significant reasons for reducing labour demand, and another 21% indicated that they would not immediately fill vacancies even if some employees left. This reflects that technological advancements are structurally changing labour demand, rather than merely causing cyclical fluctuations. However, looking at the overall employment situation, the Canadian labour market still shows a certain degree of resilience.
Brendon Bernard, senior economist at the job search platform Indeed, points out that since the post-pandemic hiring peak subsided, the job market has continued to cool, but large-scale layoffs have not occurred. The latest data shows that the national unemployment rate fell to 6.5% in November, indicating that while businesses are more cautious, they are not generally pessimistic. He believes that the current economic environment is closer to a “mild slowdown” than a recession.
Overall, Canada’s employment outlook for the first half of 2026 presents a picture of “slowing growth but not stabilizing.” Tariffs and geopolitical uncertainties have dampened corporate expansion, while artificial intelligence is reshaping job structures. However, stable macroeconomic fundamentals and a relatively healthy unemployment rate provide a buffer for the labour market.
For job seekers, opportunities still exist, but competition will increasingly focus on skills, efficiency, and adaptability. For businesses, maintaining a talent pool while controlling costs will be a key challenge for human resource management in the coming year.