OTTAWA — Canadian businesses are still holding back on hiring and investment even as recession fears ease, the Bank of Canada said in new survey results, Jan. 19, 2026. In the Bank of Canada survey, 21% of firms said they expect to reduce staffing over the next 12 months, a sign that many executives see demand staying soft into 2026.
Bank of Canada survey shows hiring plans tilt defensive
The central bank’s fourth-quarter Business Outlook Survey, based on interviews conducted Nov. 6-26, 2025, found business sentiment remained subdued, though above its low from earlier in 2025. Firms reported weak sales growth over the past year — including one-third that cited a decline in sales volumes — but they expect sales to improve slightly in the year ahead.
The Bank of Canada survey also pointed to a labor-market warning: a larger share of firms are planning job cuts than at any point since 2016. Reuters reported the share planning workforce reductions rose to 21%, while the Bank of Canada’s overall business outlook indicator improved to -1.78 from -2.27 in the prior quarter, remaining in negative territory.
Recession planning eased: 22% of firms said they were budgeting for a recession over the next 12 months, down from 33% in the prior quarter.
Price pressures cooled: firms reported fewer tariff-related cost pressures and generally did not expect substantial selling-price increases; inflation expectations stayed roughly between 2.5% and 3%.
Investment stayed conservative: spending intentions improved slightly, but many firms prioritized routine maintenance over expansion.
An RBC Economics note said the improvement in business confidence looks uneven across industries. It added that many exporters reported they were not subject to tariffs because of exemptions under the Canada-U.S.-Mexico Agreement, while tariff-exposed sectors such as metals and autos described weaker outlooks.
Consumers in the Bank of Canada survey worry about jobs and debt
The companion Canadian Survey of Consumer Expectations, conducted online Oct. 30-Nov. 18, 2025, with follow-up interviews Nov. 21-27, pointed to growing household anxiety. Consumers reported a higher perceived risk of missing a debt payment and a slightly greater chance of losing a job, and they scaled back spending plans.
One respondent in the Bank of Canada survey follow-ups summed up the pressure: “Almost everybody’s living on credit….” The Bank of Canada said near-term inflation expectations remain higher than before the pandemic, while longer-run inflation expectations eased below pre-pandemic levels.
Continuity check: the mood has improved, but not snapped back
The latest reading extends a gradual climb off mid-2025 lows. In July 2025, the second-quarter Business Outlook Survey found firms limiting hiring and investment amid tariff-related uncertainty and spillover effects across the broader economy. By October 2025, Reuters reported the business outlook indicator had inched up to -2.28 from -2.40, but the share of firms expecting a recession rose to 33% from 28%, leaving plans to add staff and capacity muted.
For now, the Bank of Canada survey message is that the worst fears are fading, but confidence remains fragile: firms are planning for modest growth, and many are preparing to do more with less.
