The latest Business Conditions survey from StatCan offers a steady picture of how employers are approaching the end of the year. It shows a market that continues to move forward even as it absorbs persistent pressure from costs, wages and skills shortages. What makes this release notable is how closely it aligns with patterns that have been visible across several months of economic and labour data. Taken together they point to a labour market that is cooling only at the margins while remaining structurally tight.

Recruiting difficulties remain a central theme for businesses. More than one quarter of employers expect challenges finding skilled workers in the coming months, and this is consistent with what we have seen in recent StatCan surveys throughout 2024 and early 2025. In each quarterly edition, sectors such as construction, accommodation and food services, and retail have repeatedly identified labour availability as a major obstacle. These sectors also showed high vacancy rates during the period when job vacancies were easing nationally. Even as national vacancy numbers have fallen from their peak in 2022, they have remained above pre pandemic norms, particularly for roles requiring hands on technical skills or customer facing experience. The persistence of these constraints signals that the limitation is supply rather than demand.

Wage expectations tracked by StatCan also echo trends that have been present for more than a year. Nearly four in ten businesses plan to increase wages over the next twelve months, with manufacturing and service industries showing even stronger intentions. This aligns with the trajectory observed in the Labour Force Survey, where average hourly wages have grown steadily year over year, often in the range of four to five percent depending on the month. StatCan’s Business Outlook Survey from earlier in 2025 recorded similar pressures, with firms reporting that compensation growth remained one of their most significant cost challenges. The newest survey continues this pattern. Employers remain committed to raising wages not only due to inflation but also to retain experienced workers whose replacement costs are high.

Despite these pressures, businesses maintain a stable sense of optimism. Roughly two thirds report being somewhat or very optimistic about the year ahead. This level has held remarkably steady in previous quarters and contrasts with what one might expect given volatile interest rates and persistent cost inflation. History suggests that when business sentiment holds firm across multiple surveys, hiring does not collapse. We saw a similar pattern in late 2023 and early 2024 when optimism remained steady even as the economy slowed. The labour market at that time did not fall into broad contraction. Instead it shifted toward more selective hiring with stronger demand for skilled or revenue critical roles. The current data points in that same direction.

Rising costs continue to dominate the list of obstacles that businesses expect to face in the near term. More than half anticipate cost related challenges, a proportion that has barely moved over the past several quarters. Previous StatCan editions showed the same consistency, with input prices and real estate standing out repeatedly as major burdens. These constraints do not halt hiring but they change how employers approach it. In 2024, periods of elevated cost pressure coincided with a noticeable increase in the use of temporary and contract workers. The temporary help services subsector saw its volumes stabilize or grow in months when permanent hiring slowed. A similar pivot is likely over the next three to six months as firms balance financial discipline with the need to maintain operations.

The short term horizon suggests a labour market continuing its gradual adjustment. Hiring will remain active in sectors facing chronic shortages. Others will move cautiously but will not retreat entirely. Wage pressures will continue at a controlled pace, much like the moderated yet persistent wage growth recorded throughout 2024 and 2025. Employers will place greater emphasis on workers with specific technical abilities, industry certifications or bilingual capabilities, especially in markets such as Quebec where language requirements remain high.

Looking ahead to the broader 2026 outlook, the trajectory will depend on how inflation and financing conditions evolve. Past cycles have shown that when inflation begins to settle for several consecutive months, employers reopen hiring budgets more decisively. We saw this in mid 2023 when a brief period of softer inflation was followed by renewed hiring in professional and technical occupations. If cost pressures persist instead, the market is likely to split between sectors that expand and those that rely more heavily on contingent labour. The common element across both outcomes is the continued importance of addressing skills shortages. Employers have repeatedly identified these shortages in every major StatCan survey since 2021, which suggests the issue is structural rather than cyclical.

The latest Business Conditions survey therefore reinforces a familiar but important message. The labour market is not entering a broad slowdown. It is instead navigating a mix of stable demand and persistent constraints that revolve around skills, wages and costs. For staffing and recruitment leaders this environment rewards preparation and sustained investment in talent pipelines. The firms that position themselves early, strengthen candidate networks and help clients manage wage expectations will be the ones that capture the opportunities created by a market that continues to move forward despite its challenges.

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