Economy | Spring 2026 rennie Landscape

This article is a section of the Spring 2026 edition of the rennie landscape, our semiannual report on the forces shaping housing markets in Metro Vancouver and across our key markets.

Each section of the landscape explores a different piece of the broader story—from interest rates and the economy to demographics, credit, and housing. Together, they provide context for understanding how these factors interact and what they mean for Metro Vancouver’s housing market.

Labour markets across Canada have languished for the better part of the past four years. The resulting elevated unemployment rate shows Canadian workers are on worse relative footing than past downturns.
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PERSISTENT UNEMPLOYMENT
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Since the middle of 2022, when generationally-high inflation paved the way for the Bank of Canada to ratchet up interest rates, Canada’s labour market has suffered. And even with the Bank of Canada lowering its policy rate back to 2.25% (we’ll discuss this more later on), hiring has, for the most part, remained soft. The unemployment rate bottomed out at an all-time low of 4.8% in July 2022 and steadily rose to the peak of the current cycle at 7.1% in September 2025, before falling back to 6.7% in February.
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⁠That the unemployment rate remains so much higher than its previous low point nearly four years later stands out relative to previous downturns this century. The pandemic brought a massive shock and quick recovery, while the Great Financial Crisis saw a sharp increase followed by years of slow and steady labour market improvement. The 2001 spike was neither particularly sharp nor long-lasting.
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⁠While we are comparing today’s unemployment rate to its all-time low, it’s worth pointing out that demographics have played an important role here. Canada’s aging workforce put downward pressure on the unemployment rate for the past two decades as boomers reached retirement age.
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⁠Looking ahead, the federal government’s new immigration plan seeks to shrink the number of non-permanent residents in Canada over the next two years which will result in population loss. The labour market is likely to tighten in 2026, even without substantial hiring, bringing the unemployment rate lower. While this might be helpful to those looking for employment, it will not serve as an indicator of an economy that’s finding its footing. One area of the labour market where declining non-permanent residents will likely have an outsized impact is on youth employment, which we explore next.

GETTING A FOOT IN THE DOOR ONCE MORE
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Canada’s labour market woes have been particularly hard on its youngest workers. That trend, however, has begun to ease, in part due to the reversal of temporary migration.
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As the unemployment rate steadily rose over the past four years, Canadians aged 15 to 24 have been disproportionately impacted. We noted in the last edition of the rennie landscape that not only was the youth unemployment rate rising, but participation fell as well. That deteriorating labour market for young people was occurring alongside a growing population of non-permanent residents. The youth unemployment rate grew from 9.0% in March 2022 to 13.4% in June 2024 as the temporary resident share of Canada’s population doubled from 3.7% to 7.4%.
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⁠Non-permanent residents tend to be quite young when they move—the vast majority enter Canada under the age of 25—therefore, it stands to reason that this segment of labour supply was impacted. The policy change to reduce the share of temporary residents to 5% of Canada’s population has already had an impact. The unemployment rate for 15 to 24 year olds grew to 14.1% in February but remains lower than its level one year ago. The total population of that segment (per the Labour Force Survey) peaked in August and has since declined. As the non-permanent resident population continues to shrink, watch for the youth unemployment rate to fall further.

EMPLOYERS AND EMPLOYEES AGREE: JOB SECURITY IS NO GUARANTEE
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Despite an unemployment rate that’s begun to fall, sentiment about the state of the labour market over the next year remains decidedly bearish amongst both businesses and consumers.
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As we noted earlier, Canada’s unemployment rate has been declining of late and is likely to decrease further in 2026. Just because the labour market is tightening—mainly due to demographic changes—doesn’t mean many businesses are planning to expand their workforces. To wit, the latest Bank of Canada Business Outlook Survey shows that the difference between firms expecting to increase employment and those expecting to reduce it over the next 12 months is just 16%. That’s the second-lowest in the history of the survey (dating back to 2014), as firms remain cautious in their planning.
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⁠Similarly, the latest Consumer Expectations Survey rates the probability of losing one’s job in the next 12 months at 19%, just below the all-time high result of 21%. Regardless of what ultimately transpires in the labour market over the next 12 months, prevailing sentiment is that Canadians are concerned about the state of the job market. That sentiment influences behaviour as consumers are less willing to make major outlays, such as purchasing a home, without employment stability.

CALCULATING CANADA’S EXPORT TAXES
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While the US has levied a variety of tariffs on goods from Canada, the lion’s share of Canada’s exports remain tariff-free, thanks to our free trade agreement.
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2025 was a roller-coaster ride for many countries as a new, ever-changing, suite of tariffs were brought forward by the US. Canada was among those nations targeted with a variety of blanket and sectoral tariffs on its exports. The good news for Canadian businesses (and American consumers) was that the vast majority of Canadian exports were exempt from these tariffs, provided they complied with the Canada-United States-Mexico Agreement (CUSMA).
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⁠The additional sectoral tariffs have had detrimental impacts on specific industries, such as the forestry industry here in BC as an estimated $2 billion US was paid in softwood lumber duties in 2025. That said, around 88% of the value of all Canadian goods entering the US has been tariff-free. The tariffs have been a drag on economic activity, though Canadian goods have enjoyed a competitive advantage relative to other jurisdictions which face higher tariff rates when selling into the US market.
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⁠The importance of CUSMA has become increasingly apparent as Canadian exports have continued to enjoy access to US consumers. With the agreement up for renewal, renegotiation, or withdrawal from member countries in July, it will be critical for Canada to secure a new (or renewed) agreement in a timely fashion

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