Write to: Minh Dang mdang@staffingjournal.ca
Canada’s latest economic snapshot paints a picture of subtle resilience amid headwinds. According to a recent RBC analysis, the country’s economy recorded a sharp contraction of 1.6 percent on an annualized quarterly basis in spring, more severe than most forecasters had expected, yet roughly in line with the Bank of Canada’s forecast under current tariff conditions.
Much of the slump stems from collapsing exports, particularly to the United States, where pre‑tariff stockpiling in the prior quarter led to a broad pullback. Though exports and imports both dropped in the second quarter, exports by nearly 27 percent and imports by about 5 percent, the decline looks poised to temper. U.S. advance trade data have already signaled a modest rebound.
Beneath the headline dip, Canada’s domestic sector shines through. Consumer spending surged (up 4.5 percent in Q2 versus just 0.5 percent in Q1), while housing investment recovered strongly after earlier weakness. Add to that a modest GDP uptick of 0.1 percent in July and early indicators, especially in wholesale trade, manufacturing, and the housing market, suggest steadier footing ahead.
Labour Market: Coolly Cautious but Selectively Active
Recent labour‑market signals echo this cautious optimism. RBC notes that employment appears to be stabilizing, with a slow-but‑positive outlook for the second half of 2025.
Layered onto this is the CSJ Hiring Index, a forward‑looking gauge blending current data and six‑month outlooks. In July 2025 it stood at 5.4 out of 10, a moderate score that signals a halting stabilization in hiring appetite but no broad acceleration.
Under the surface, opportunities are uneven. The index specifically highlights strength in engineering, along with growth in logistics and warehousing, while lower‑skilled industrial jobs, admin, and customer‑service positions remain sluggish. Sales roles, however, are on the rise.
Reading the Signals: Where the Economy Is Gaining Steam and Where It Isn’t
In plain terms, Canada’s economy is not roaring ahead, but it isn’t falling into recession either. The contraction in Q2 underscores vulnerabilities, particularly in trade-exposed sectors, yet domestic demand, especially among consumers and homeowners, remains a bright spot.
That resilience filters into the job market. Companies tied to logistics, engineering, and sales are cautiously expanding, even as broader hiring remains subdued. The CSJ Hiring index’s middling score reflects this modest recovery: hiring is stable, but not surging.
For workers and firms alike, the present window offers selective opportunity. Youth, particularly younger jobseekers, may find openings in logistics, entry‑level sales roles, or engineering internships, while sectors like administrative services and traditional manufacturing show fewer signs of life.
What to Watch Next
Several threads could influence how this story unfolds:
Trade and tariffs: If U.S. demand continues to firm and Canada avoids further tariff shocks, exports may stabilize.
Domestic strength: Continued consumer spending, healthy housing markets, and investment, especially in services and construction, will be key to job creation.
Labour supply dynamics: Youth unemployment remains high, creating a ready pool of entry‑level candidates; staffing firms may tap into this talent through flexible or project‑based roles.
Policy support: Government stimulus, especially in infrastructure or green industries, or Bank of Canada rate adjustments could ease pressure on business investment and workplace hiring.
In Summary
Canada’s economy is treading water: no robust rebound yet, but no freefall either. Exports stumbled under tariff pressure in Q2, yet domestic demand and early July data suggest cautious optimism. Labour markets are holding steady, with hiring slowly picking up, but only in certain sectors like logistics, sales, and engineering, while others stay sluggish.
For jobseekers, employers, and policymakers, the message is clear: the economy is stabilizing, but the pace is slow and progress, uneven. Those poised to look into logistics, entry-level sales, or skilled technical roles may be best placed to ride this cautious recovery forward.