MNI: Canada Job Market Seen Reheating As Migrants Leave- CFIB
MNI (OTTAWA) - Canada's labor market will tighten again and face shortages as the government reduces foreign work visas even with employers currently skittish amid a threatened U.S. trade war, the head of an influential business survey told MNI.
“The immigration policy is going to be so strict though for the next few years,” said Andreea Bourgeois, Director of Economics at the CFIB. “Businesses are going to feel a lack of people” and “the labor market may overheat again."
The share of firms reporting less-skilled worker shortages is finally returning to normal after doubling to 39% in late 2021 when the economy faced a mismatch between an economic boom and the labor supply limited by Covid restrictions. The latest Barometer survey shows hiring plans and overall confidence softened following Donald Trump's late November threat of a 25% tariff.
“The labor market is very timid, and I think that’s correlated with tariffs also,” she said. Some 17% of firms plan to reduce full-time staff while 15% plan new hires. The small business group's monthly tracking has a larger sample size than the central bank's quarterly anecdotal business survey.
WAIT-AND-SEE APPROACH
The Bank of Canada has led the G7 on rate cuts this year as inflation settled back to 2%, saying the economy had moved from overheating to modest slack. Officials see room for more cuts and note slower immigration will curb economic growth in 2025. (See: MNI INTERVIEW: BOC Could Cut 50 BPS Again On Tariffs-Ex Econ)
Lower interest rates were helping sentiment in manufacturing and construction before the tariff threat, Bourgeois said. “We were on an upswing, it felt good to end the year on a positive note and look forward to 2025 as really being a year of economic recovery and economic growth, and right now it’s a wait-and-see kind of approach,” she said.
Few economists are talking about a return to a hot job market with the focus on sluggish growth in recent quarters and now the tariff wall. Some investors doubt the government will succeed in curbing immigration and removing people overstaying their work or study permits.
Unemployment is now the highest since 2017 excluding the pandemic, and the government earlier this year announced cuts to immigration citing a supply of workers running ahead of job creation. The 6.8% jobless rate remains below past economic downturns but is up substantially from a historic low of 4.8% hit in July 2022. (See: MNI INTERVIEW: BOC Needs Faster Cuts, Labour Congress Says)