From contraction to connection: what the Ivey PMI rebound means for Canadian staffing

The latest reading of the Ivey Purchasing Managers’ Index (PMI) offers a compelling pivot point for the Canadian economy as it enters 2026. After a turbulent 2025 characterized by trade volatility and a softening labor market, the December 2025 data released earlier this month signals a return to expansionary territory. The seasonally adjusted index rose to 51.9, up from a contractionary 48.4 in November. This shift above the critical 50.0 threshold suggests that purchasing activity is once again on the rise, providing a much-needed tailwind for the staffing industry as it navigates the short-to-medium-term outlook.

The Employment Catalyst

Perhaps the most significant detail for the staffing sector is the sharp rebound in the employment sub-index. This metric climbed to 53.0 in December, a substantial jump from the 48.0 recorded in November. This suggests that after a period of "low hire, low fire" dynamics, employers are beginning to re-engage with the talent market. The movement back into expansion territory for hiring intentions indicates that the cautious "wait-and-see" approach that defined the latter half of 2025 may be thawing at least partially. While the broader Canadian labor market has seen the unemployment rate creep toward the 7% mark, the Ivey data suggests that the peak of this softening may be in the rearview mirror.

Moderating Pressures and Strategic Slack

While activity is accelerating, the intensity of price pressures is showing signs of welcome moderation. The prices index declined to 63.2 from 66.1, a trend that aligns with the Bank of Canada’s efforts to anchor inflation near the 2% target. For staffing firms, this cooling of input costs combined with slightly faster supplier deliveries (indicated by an index of 47.7) creates a more predictable environment for business investment. When businesses face fewer inflationary shocks, they are more likely to commit to mid-term headcount additions rather than relying solely on temporary or "just-in-time" labor solutions.

The decrease in the inventories index to 45.8 further underscores this narrative. Businesses appear to be leaning out their holdings, which often precedes a new cycle of purchasing and production activity as demand stabilizes. In the context of the 2026 outlook, which projects a modest GDP growth rebound to roughly 1.6%, these underlying PMI movements suggest a transition from survival mode to strategic stabilization.

Looking Ahead: 2026 and Beyond