Economic and Social Reports, December 2025

There are three new articles available in today's release of Economic and Social Reports.

Employment in industries dependent on US demand declines

US tariffs on goods imported from Canada are ongoing and in flux, so it will likely take some time to determine the full impacts on Canadian employment. However, there is some evidence to suggest that the imposition of tariffs has had some implications: while total payroll employment was essentially unchanged from December 2024 to August 2025, employment in industries dependent on US demand declined by 18,100 (-1.4%). Meanwhile, employment in industries less dependent on US demand rose by 38,100 (+0.2%) over this same period.

The article "Recent employment trends in industries dependent on U.S. demand" looks at payroll employment by industry following the introduction of tariffs on Canadian exports. The paper also examines trends in layoffs, as well as hiring, to better understand labour market dynamics. While layoffs have remained essentially unchanged over the summer compared to past years, there is evidence that hiring has slowed given the rising number of people remaining unemployed from one month to the next. Slower hiring may have contributed to lower employment levels in industries dependent on US demand in 2025.

Small firms contributing to the Canada–United States labour productivity gap

The article "The role of firm size in the Canada–U.S. labour productivity gap since 2000" quantifies the contributions of both small and large firms to Canada's productivity gap with the United States. It shows that Canada's relatively high prevalence of less productive small firms is a major contributor to the Canada–United States labour productivity gap.

In 2019, small firms (fewer than 500 employees) generated 56% of nominal gross domestic product in Canada, compared with 45% in the United States. The labour productivity of Canadian small firms was 70% while Canadian large firms operated at 87% of the productivity level of their US counterparts. Overall, labour productivity in Canada's business sector was 73% of the US level, representing a gap of 27 percentage points.

Canada's higher share of small firms explained around 6 percentage points (22%) of this gap, and the lower productivity of Canadian small firms explained a further 10 percentage points (38%). Together, the greater prevalence and weaker performance of small firms accounted for 16 percentage points, or 60%, of the Canada–US productivity gap. The remaining 11 percentage points (40%) reflected the lower productivity of Canadian firms overall.

Labour productivity growth was also lower in Canada than in the United States for both small and large firms over the 2002-to-2019 period, when labour productivity in Canada grew by an average of 0.84% per year, compared with 1.56% in the United States. This divergence reflected weaker productivity growth among all Canadian firms, together with a shift in hours worked toward smaller, lower-productivity firms.

Educational attainment a key factor in employment rate gaps between immigrants with disabilities and those without disabilities

Immigrants with disabilities who have lower educational attainment are less likely to be employed than their counterparts without disabilities. However, among higher educated immigrants, no gap exists between those with disabilities and those without disabilities. A new article, "Educational attainment and employment among immigrants with disabilities," found that 77% of immigrant women with disabilities who had a bachelor's degree or higher were employed in 2021, a rate similar to immigrant women without disabilities.

By contrast, 36% of immigrant women with disabilities who had a high school diploma or less were employed, compared with 53% of immigrant women without disabilities at the same level of education—a 17-percentage point gap. The study found a similar pattern among immigrant men with disabilities and those without disabilities.

Examining immigrants with disabilities is important because the intersection of disability and immigrant status creates unique challenges to entering the labour market, and education may play a role in their labour market success.