Consumers hold the line, and that could be the start of a long awaited lift for hiring

In a moment when many had braced for economic softening, a new report from BMO offers a more optimistic (if still cautious) note: Canadian consumers, across the income spectrum, stepped up in the second quarter, helping to prop up growth even as other parts of the economy faltered.

The report, “Canadian Consumers: All Hands on Deck,” shows that households from the lowest to highest quintiles each contributed meaningfully to the rebound in spending. Lower-income groups, often the first to pull back when uncertainty rises, increased nominal spending by 5.6 percent year over year, nearly matching the overall pace of 5.8 percent. The key drivers, according to BMO’s economists, include higher incomes, strong equity and housing markets, and a shift in consumption from international travel to domestic purchases.

Still, BMO’s team is careful not to overstate the trend. Much of the increase was funded by dipping into savings, which have steadily declined over the past year. Asset prices, a source of confidence and liquidity, may not continue their ascent if global conditions deteriorate. And while September’s labour force data showed a welcome rebound of 60,000 jobs, the overall job market remains softer than it was a year ago, with total hours worked still falling.

From Consumption to Broader Rebound

The resilience of consumers is an encouraging sign, but whether it translates into a broader economic recovery depends on a constellation of other signals.

One of the most striking came from the Ivey Purchasing Managers Index, which surged to 59.8 in September, its highest level in more than a year and a half. The index, a barometer of business activity across sectors, suggested a sudden return to expansion territory after months of contraction. Even more telling, the employment sub-index climbed above 50, pointing to a tentative re-acceleration in hiring intentions.

Monetary policy may soon reinforce that shift. The Bank of Canada’s decision to cut its policy rate to 2.50 percent in September has begun to filter through to borrowing conditions, reducing costs for businesses and households alike. While the central bank remains wary of rekindling inflation, its recent tone has turned more accommodative, signalling that further easing could come if growth continues to lag.

Exports, meanwhile, remain the weak spot. Despite a mild improvement in August, trade volumes are still constrained by slower U.S. demand, the lingering effects of tariffs, and geopolitical uncertainty. For now, that leaves domestic consumption as the main pillar of support for the Canadian economy, and the sector most likely to shape near-term employment dynamics.

What It Means for Staffing Firms and Hiring

For staffing firms, this evolving landscape may represent the first real inflection point in months. When consumers open their wallets, even cautiously, the ripple effect spreads quickly through industries that depend on household demand: retail, logistics, food services, and hospitality. These sectors tend to react first to rising spending, converting early sales momentum into short-term hiring needs. Many of these roles are filled through temporary or contract placements, which give employers flexibility as they test demand without committing to full-time headcount.