Hiring will stay ‘subdued’ over next year due to trade war, data suggests

The job market is expected to remain difficult to break into over the next 12 months, as most businesses report pausing growth and hiring plans amid the trade war.

Canadians struggling to find stable employment or switch jobs may face an uphill battle over the next 12 months as the trade war keeps most businesses stuck in neutral and the job market “subdued.”

A new report from the Bank of Canada shows a large portion of businesses say they are taking a wait-and-see approach rather than investing in growing their operations and hiring new workers.

According to the central bank’s Business Outlook Survey for the third quarter of 2025, most businesses say they expect demand “weakness” for their products and services over the next year, which means many are expected to hold off on hiring new employees.

“Hiring intentions remain subdued. Most firms do not plan to increase the size of their workforce over the next 12 months. Soft demand, ongoing tariff uncertainty and minimal capacity pressures mean few businesses need to add staff,” said the Bank of Canada.

“Businesses no longer expect sales growth to strengthen over the coming year as tariff-related impacts continue to hold back demand. Firms attribute this anticipated weakness largely to broad spillover effects from the trade conflict,” said the Bank of Canada.

Some of these “spillover effects” include weaker spending by customers on services like renovations, corporate travel and events, as well as worries of less consumer spending over the next 12 months as affordability remains a struggle for many, according to the survey report.

The central bank also cited the weak outlook for the housing sector as one of these trade war effects, which has hampered demand for businesses and their services. This may include demand for home renovations and housing developments.

Tariffs imposed by the United States in particular have meant higher costs for some goods and services, which has led businesses and global economies, including Canada, to seek alternative trading partners.