A cautious flash of green; Ivey’s PMI rebound

Canada’s Ivey Purchasing Managers Index surged to 59.8 in September (seasonally adjusted), signaling a strong rebound in procurement activity. Above 50 indicates expansion, and September’s jump suggests many organizations resumed or accelerated buying after a sluggish summer. Among the sub-indices, employment nudged back above the 50 threshold, inventories firmed, and supplier lead times shortened, though price pressures remain persistent.

But that optimism collides with a more muted tone in hiring appetite. The CSJ Hiring Index, a near-real time barometer of firm sentiment, dropped to 4.8 out of 10 in August (from 5.4 in July), its lowest reading in over a year. Whereas the Ivey reflects demand from purchasing departments, the CSJ captures how ready companies are to turn that demand into new headcount. The soft reading suggests firms are holding back on hiring, especially in client-facing and discretionary segments, even as procurement activity strengthens.

This divergence is instructive. The Ivey’s pickup suggests inventories and supply chains are being restocked, which typically precedes increases in related hiring. The CSJ’s decline, however, implies that many firms remain cautious about converting momentum into payroll, likely because broader demand, especially in services, has yet to solidify.

Putting it in context: Labour Force Survey and other signals

In September, Statistics Canada’s Labour Force Survey showed the unemployment rate steady at 7.1 percent, following job losses earlier in the summer. The labour market remains softer than in 2023.

The drop in the CSJ index aligns with that softness: firms appear uncertain whether demand is stable enough to justify expanding staff budgets. Wage growth is modest, vacancies have cooled, and some sectors, especially in services, still lean toward caution. 

In past cycles, we’ve seen a lag: procurement leads, hiring follows, but often only after sustained confidence. In that sense, the current mix is reminiscent of episodes earlier in 2024, when PMIs flirted with expansion but labour market measures remained sluggish. Staffing firms that timed expansions too early then had to backtrack; those that held a “watch and wait” posture fared better.

Where staffing firms should look (and act) in this mixed landscape

Given the mixed signals, here’s how staffing agencies and labour firms should adapt: