Canada Hiring Outlook 2026: Trade Uncertainty and AI Cool Job Expansion

Canadian employers are approaching the first half of 2026 with greater caution when it comes to hiring, amid ongoing uncertainty around U.S. trade policy, tariff pressures, and the accelerating adoption of artificial intelligence. Recent surveys and economist commentary suggest companies are not slamming the brakes on hiring altogether, but are clearly dialing back expansion plans as the labour market transitions into a more measured adjustment phase.

According to a national survey released on December 29 by Express Employment Professionals, and cited by the Toronto Star, only 44% of Canadian businesses plan to increase staffing levels in the first half of 2026. That compares with 51% at the same time last year. Meanwhile, approximately 42% of employers expect to maintain current headcounts, while roughly 10% anticipate workforce reductions.

The survey polled more than 500 hiring managers across sectors including education, construction, retail, health care, and finance.
Express spokesperson Daisy Kaur described the current environment as a slowdown rather than a freeze. She noted that while companies continue to hire, they are doing so more selectively, with a sharper focus on cost control and role efficiency. Employers are placing greater value on candidates with versatile skill sets and on positions that clearly contribute to long-term business value.

From a macroeconomic perspective, trade-related uncertainty remains a key drag on employer confidence. BMO senior economist Shelly Kaushik highlighted that tariff risks tied to U.S. trade policy are particularly disruptive for industries such as automotive manufacturing, steel, aluminum, and forestry. Beyond higher export costs, delayed investment decisions in these sectors have also translated into job losses. Kaushik emphasized that trade uncertainty tends to ripple through the economy via reduced capital spending, weaker business investment, and softer consumer sentiment — ultimately weighing on employment.

Cost management emerged as the primary reason businesses are scaling back hiring, followed by tariff concerns, softer demand, and the growing role of automation. Among firms planning layoffs, 23% cited automation and AI as key contributors to reduced labour needs, while 21% indicated they would not immediately replace departing employees. These findings suggest that technological change is reshaping labour demand in a structural way, rather than merely reflecting short-term economic cycles.

Despite these headwinds, Canada’s labour market continues to show resilience. Indeed senior economist Brendon Bernard noted that while hiring has cooled since post-pandemic peaks, widespread layoffs have yet to materialize. Recent data show the national unemployment rate easing to 6.5% in November, indicating that employers remain cautious but not overtly pessimistic. Bernard characterized the current environment as one of moderate deceleration rather than recession.

Overall, Canada’s employment outlook for early 2026 appears to be one of slower momentum without destabilization. Trade and geopolitical uncertainty are dampening expansion plans, while AI adoption is reshaping job structures. Still, relatively stable macroeconomic conditions and manageable unemployment levels are providing a buffer. For job seekers, opportunities remain, but competition is increasingly centered on skills, productivity, and adaptability. For employers, balancing cost discipline with talent retention will be a defining challenge in the year ahead.