Canada hasn’t seen this many businesses planning to downsize in a decade, as they try to curb rising costs. That was the general takeaway from the Bank of Canada’s (BoC) latest Business Outlook Survey (BOS) for Q4 2025. Firms aren’t just bracing for a slowdown and hiring freeze, but the share of firms expecting staff reductions has surpassed the initial days of the pandemic.
Canada’s Job Outlook Is The Softest Since The Oil Recession
Employment sentiment is the weakest in over a decade, excluding the pandemic. The balance of opinion, the gap between firms hiring and those shrinking, fell to its lowest since Q4 2015. That was during Canada’s 2015 oil patch recession, after a collapse in prices.
“The Bank of Canada’s Business Outlook Survey showed clear signs of soft hiring ahead,” explains Robert Kavcic, a senior economist at BMO. He added, “That deterioration was driven mostly by plans to reduce future employment levels.”
Or more bluntly, this isn’t a neutral slowdown where the growth merely stalls. Firms actively anticipate downsizing, either through employee attrition or layoffs. Today’s erosion is also broad-based, not confined to a sector like it was in 2015.
More Canadian Businesses Expect Job Cuts Than During The Pandemic
Share of Firms Planning To Reduce Full-Time Jobs Over The Next 12 Months.
Source: BoC; Bank of Canada.
The survey itself reveals an uncharacteristic jump in staff reductions forecast by firms. About 21% of firms expect to reduce employment in the latest survey, the highest level since 2016. That’s right, no exclusions or exceptions—firms feel more bearish than they did during the peak of the pandemic.
This point is underappreciated when comparing the pandemic to more destructive recessions. During the pandemic, firms wanted to keep workers but couldn’t operate. Today, firms are operating but looking to reduce the size of their workforce. The pandemic was a temporary shock that disrupted business, while today is a structural shock that means the economy is fundamentally changing.
“Most businesses do not intend to increase the size of their workforce over the next 12 months, and the share planning outright staff reductions rose this quarter to its highest level since 2016. An increasing number of firms expect they will lay off staff.” Bank of Canada, Business Outlook Survey, Q4 2025.
Even the most optimistic firms have seen better days. About 43% of firms expect to maintain their headcount in the latest survey, down from the decade’s peak of 57% in Q2 2025. Meanwhile, the share of companies expecting to add jobs fell to 37% in Q4 2025, down from 45% a year prior and less than half of the 80% peak just 4 years ago.
Despite this eroding sentiment, wages are still seen making robust gains.
Canadian Wage Growth Outlook Remains Elevated Despite Weak Jobs
There’s a serious disconnect between the outlook and wage growth in the near-term, suggests Kavcic. “…wages remain sturdy, with expectations stepping higher in both the BOS and Survey of Consumer Expectations. In the BOS, expectations ticked to 3.3%, which points to continued real wage gains ahead,” he explains.
He further notes major wage settlement averages were above 4% in Q2 2025. Though he adds that Q3 was slower, “some of this might still reflect the legacy of past inflation as contracts come up for renewal.”
The BOS also reveals employers see their operating costs rising soon. Combined with higher wage growth, this may be a contributing driver of the layoffs themselves.
The pandemic distortions are still working through the system. We had too much stimulus, now we have the hangover. The focus should be on productivity to grow out of this.
Pandemic? This is excess since 2007 that’s built up and is about to go kabloom.
Facts
Great you got the 5% raise. Now half of you are done.
To be fair, home prices need to plunge a lot more or wages need to surge a lot higher really fast. When countries collapse after leading for centuries, it usually starts due to normalization refusal.
It’s not just me, there’s a big disconnect between official data and sentiment, right?
“war time” data. It’s all going to be cooked as national security, but that doesn’t really matter. We take data as face value across Western countries.
… then we’re surprised why things are suddenly crap on a minor downturn. The reality is they were hiding the downturn, and the erosion in data is the point where not even cooking the books can spin what’s happening.
How many firms indicated that experiments with AI replacements, whether just a chatbot for customer-facing service or something structural, were behind some of these expected deletions?
RUG PULL
RICH BUYERS WALKED AWAY
WAITING FOR THE OVERINDEBTED TO ROLL OVER AND DIE
CHEAP DEALS AHEAD
can we stop hearing from mr allcaps? what has he added aside from low value spam for the last year?
if the USA market is that good why is this moron bothering with Canadians , if you buy a house there the next thing is buying a gun. there are more guns in the USA than there are people , there were 47000 gun fatalities last year and 36000 wounded . and I bet Mr McWTF owns more than one
Canadians are for the most part really dumb.
Any Canadian can invest in USA real estate and never leave Canada. Hire a property manager to keep your rentals full and looked after.
Sheesh! Are you going to get ahead in Canada paying ten times more for everything?
Buy USA houses for 50K or less instead of one Canadian condo for 500K.