Canada is already experiencing its highest unemployment rate since 2016, and forecasters generally expect 2026 to remain in that elevated-but-not-worsening range rather than spike dramatically higher.
Per Polymarket: This market will resolve to “Yes” if the seasonally adjusted unemployment rate (15 years and over, total) reported by Statistics Canada in the Labour Force Survey for any month of 2026 is higher than that of any other month since January 2017 (inclusive). Otherwise, this market will resolve to “No”.
What “since 2016” means numerically
- Statistics Canada data show Canada’s unemployment rate was about 7.0% in 2016.
- In 2025, the jobless rate peaked at 7.1% in August–September, described as the highest level since 2016 once the pandemic years are excluded.
- By December 2025, unemployment was 6.8%, still well above pre‑pandemic norms and close to the 2016 level.
Outlook for this year (2026)
A December 2025 jobs report notes that the labor market has visible slack but not a collapse, with unemployment at 6.8% as of the latest data. Forecasts for 2026 from private economists and macro models generally point to unemployment hovering in the mid‑6% range, with only modest improvement from an average around 6.9% in 2025.
A few months ago, Casey McLaughlin was executive director of the Yukon Transportation Museum in Whitehorse, however, just last month, she joined over 200 other hopefuls to stand in line at a job fair in Ottawa hoping to get one of the many positions available at the new Food Basics grocery store.
“I’m willing to go from being a boss to shelving vegetables because you have to pay the bills,” she told CBC News. “It’s really hard to find a job in Ottawa right now.”
And Nafisa Ijie, also went to the job fair at a hotel in Barrhaven, even though Nafisa has her Master’s degree and has worked as a Business Analyst in Nigeria & England.
“It’s been very difficult getting a job, especially when you don’t have the Canadian work experience. So you just have to start off somewhere,” said Ijie, who arrived in Canada a little over a year ago, via CBC News.
Putting it together
Current projections suggest 2026 is more likely to see unemployment stay roughly around late‑2025 levels or edge slightly lower rather than climb to a clearly higher peak than last year.
Prediction estimate: The best read of the data and forecasts is that Canada, in 2026, probably won’t have the highest unemployment rate since 2016, as 2026 unemployment is expected to be elevated but gradually improving.
What could spike Canada’s unemployment rate?
This is a hypothetical example, and it’s based on an illustrative “bad-case” for 2026, which combines a renewed US Tariff (or a breakdown in NAFTA), a Confidence Shock that causes a freeze in investment, a housing downturn, and a delay in the central bank’s response to these developments. This bad case can result in: Slow Hiring turning into widespread layoffs in manufacturing, construction, and services, with unemployment rising above the current 6.8% rate to levels assumed in most base-case forecasts. This would be in addition to the structural changes in the labor market being driven by demographic aging, tightened immigration policies, and the increasing use of automation/artificial intelligence technologies.
If there is a simultaneous decline in demand, displaced workers will have longer durations of joblessness, leading to increased measured unemployment.
These are the underlying factors that contribute to a significant increase in unemployment in 2026. The Bank of Canada has identified five major factors that could contribute to this scenario:
1) A deeper or renewed recession,
2) Escalation of trade tensions and/or a breakdown of trade agreements,
3) A shift from low hiring, low firing” to mass layoffs,
4) An abrupt worsening in financial conditions, and
5) Missteps by policymakers and structural shifts in the economy.
If one or more of these factors occur, the consequences could be severe and prolonged. Therefore, forecasting a return to near full employment in 2026 appears increasingly optimistic. As such, we believe that the unemployment rate will remain high, possibly in the double digits, for several years before returning to near full employment.
In short, we do not expect unemployment to drop to 5 percent anytime soon. The economic recovery will be slow and protracted, with high unemployment rates persisting for many years. Our forecast is that the unemployment rate will remain at least somewhat high until the late 2030s, when the Canadian population reaches retirement age.
