A Strong Spring, a Shaky Fall
In all honesty, a few months ago I thought we might finally be turning a corner. The economy grew at an annualized 3.3 percent in the second quarter, and employers added 181,000 jobs between April and July. For an industry that lives and dies by client confidence, it felt like the mood was lifting.
August reminded me how quickly that can change. Employment fell by 42,000, and the category that lost the most jobs was business, building and other support services (that's where staffing agencies are counted by the way). I wouldn't read too much into a single month, but if you've been on the phone with clients lately, I suspect the number won't surprise you. Wage growth also slowed to 2.0 percent, the weakest since 2017, and the slowdown was sharpest among lower-paid workers. That's a sign demand for that kind of labour is fading.
The obvious culprit is trade. The talks with Washington fell apart in August, the U.S. slapped 50 percent tariffs on about $20 billion of Canadian goods, and Ottawa hit back in September. Manufacturers had been hiring all summer on the assumption that a deal was coming. That assumption is gone, and higher U.S. auto tariffs are due in January. Small business owners seem to have drawn the same conclusion: their confidence fell about 10 points in September, and more of them now plan to cut staff than to hire.
Two other things caught my attention this month. The Bank of Canada held rates in September, but for the first time in a long while it sounded more worried about inflation than growth. A hike isn't most forecasters' base case, but it's back in the conversation. If your business runs on a credit line to cover payroll, that's worth thinking about now. And Statistics Canada quietly revised its population numbers, adding back roughly 240,000 temporary residents. It turns out the country never actually shrank. The labour pool is deeper than we'd been told, which helps explain why candidates are easier to find and why wage pressure has eased.
So where does that leave us?
My read is that the next few months will be harder on firms serving small and mid-sized clients and light-industrial accounts than on those with large enterprise or public-sector books. I'd expect shorter extensions, slower conversions, and clients who want flexibility above all else. That's not a crisis, and in some ways it plays to our industry's strengths. But it's a time to watch receivables closely and stay close to clients. The September jobs report lands on Oct. 9, and it'll be the first real look at a full month under the new tariffs. I'll be watching it closely, and I'd encourage you to do the same.
Below you'll find a short excerpt from each of this month's articles, with links to the full pieces.
Minh Dang - Editor in Chief
For the First Time in Years, the Next Rate Move Might Be Up
The Bank of Canada has held at 2.25 percent for nearly a year. Its language in September suggested the debate inside the bank has shifted, and employers who rely on cheap credit should take note.
Factories Were Hiring All Summer. Then the Talks Collapsed.
Canadian manufacturers spent five months expanding. A breakdown in trade negotiations with Washington has put the light-industrial staffing market on uncertain footing heading into winter.
The Economy Grew at Its Fastest Pace in Three Years. Small Businesses Didn't Feel It.
Second-quarter output surged. A month later, small-business confidence suffered one of its sharpest drops of the year, and more owners now plan to cut staff than to hire.
Canada's Population Wasn't Shrinking After All
For most of the year, the official numbers said the country was losing people. A September revision added back hundreds of thousands of temporary residents and reshaped what the labour supply actually looks like.
Hiring will come back. Most organizations are not ready.
This week's guest writer Mehdi Kallala, a specialist in hiring strategy, candidate experience and the evolving future of talent acquisition, is analyzing staffing processes and identifying flaws and contradictions as we will ultimately get back to a growth market soon. Read his full analysis at the link below.