Small business, big problems

No one wants to say it, but we’re probably in a small business recession

SEEMS EVERYWHERE YOU look in the business press nowadays, there’s fear of a recession — even if nobody dares utter the R-word right now. But the hiring data doesn’t lie, and analysts are pointing to the gap between small and large business hiring practices as perhaps the strongest recession indicator out there.

Click here to view this article in the London Inc. Worklife newsletter

According to recent numbers from BMO Capital Markets, large companies in Canada (more than 500 employees) have added nearly 600,000 jobs since the start of 2025, while small businesses have shed more than 300,000 jobs. “This means nearly all net job creation is now coming from large employers, a reversal of Canada’s traditional reliance on small business as the primary job engine in the country,” reads a report in HR Reporter.

Story Continues Below

 

“Given that small- and medium-sized employers with fewer than 500 workers have traditionally accounted for roughly 80 per cent of the job market, it’s extremely rare for larger employers to be adding more jobs on a year-over-year basis,” wrote The Globe and Mail’s Jason Kirby.

“Going back to 1997, when Statistics Canada’s records begin, almost every such instance has accompanied a crisis such as the Great Recession, the 20215 collapse in oil prices, and the pandemic.”

Story Continues Below

 

Analysts aren’t entirely surprised by it, saying it mostly reflects larger firms’ greater ability to weather the trade war. But they do believe it ultimately amplifies the risks to the Canadian economy if small businesses don’t ramp up hiring.

“This divergence by firm size raises a downside risk,” said BMO senior economist Sal Guatieri. “So, unless they keep punching above their weight — or smaller companies ramp up hiring — overall job growth could weaken.” Kieran Delamont