Economic Journal
The latest Ivey Purchasing Managers Index for November landed below the neutral threshold at 48.4, signaling contraction in overall business activity after a string of months above 50. This marks the first clear downshift in business sentiment since the mid-year rebound, and it carries important implications for the labour market and hiring dynamics going into 2026.
A PMI reading below 50 means that fewer purchasing managers reported expansion than contraction in their activity compared with the previous month. It is a diffusion index, so the decline does not imply collapsing conditions but does point to a meaningful slowdown. This shift mirrors broader softness in other activity indicators and suggests that firms are moving to a more cautious footing as 2025 closes, although this is only one data point in the series so far.
Looking under the surface, the employment component dropped sharply to 48.0 from 51.8 in October. This is perhaps the most direct signal in the PMI of weakening hiring intentions and labour demand. Purchasing managers are responsible for inputs that feed sales, production and services. When they report contraction in employment, it often foreshadows slower job gains in aggregate payroll data and points toward rising spare capacity in the economy.
The inventories index sat at 50.0, down from 51.7. Neutral inventory readings in the PMI context indicate that firms are neither building stock in anticipation of higher demand nor drawing down inventories forcefully. While not contractionary, this plateau suggests firms are reluctant to hold excess stock amid uncertain demand. For labour markets, this is a sideways signal. Without inventory accumulation, there is less impetus to expand production teams or order additional materials that support hiring in logistics, warehousing and manufacturing.
Supplier deliveries edged up to 49.8 from 45.4. On its face this suggests a slight easing of delivery bottlenecks, but the reading remaining below 50 still reflects contractionary conditions. Slower deliveries can weigh on production scheduling and dampen hiring in sectors that rely on tight inventory cycles, including construction and industrial services.
The prices index climbed further to 66.1, indicating persistent cost pressures. These pressures are not unusual in the PMI context but can influence hiring decisions if firms feel squeezed on margins. When input costs remain high, employers often postpone permanent hiring and rely more on flexible or cost effective staffing models to manage operating budgets.
Taken together, the PMI snapshot for November paints a picture of slowing demand and retreating business confidence. A contraction in the headline index aligned with a decline in the employment component suggests that firms are recalibrating their workforce needs in response to weaker activity signals. Labour markets are still historically stronger than in deep recessions, but the pace of job creation could be losing momentum in the near future. This aligns with other recent purchasing data showing contraction in both services and manufacturing sectors.
From the standpoint of staffing firms and labour market observers, this could imply softening in business activity that usually precedes slower payroll growth and fewer openings in permanent roles. Firms may keep shifting budgets toward variable labour models and tighter control of headcount until a clearer demand rebound emerges. Contract roles may become more common as companies defer long-term commitments while still maintaining operational flexibility.
The key question now is whether this reading represents a one-off dip or the start of a broader deceleration trend. If the PMI remains below 50 in December and into early 2026, it would reinforce the narrative that hiring momentum has peaked and that businesses are preparing for a period of moderation. This would likely temper wage growth and keep upward pressure on unemployment metrics modest rather than sharp.
For now, November’s Ivey PMI serves as a cautionary signal that the labour market is potentially entering a less buoyant phase. It underscores that the link between activity and employment has weakened and that labour demand may soften as firms navigate slower orders and elevated input costs. The coming months of PMI data will be critical for confirming whether this downturn in business sentiment persists or soon stabilizes.