Canada’s factories are still running below full speed, but the skid is easing. The S&P Global Canada Manufacturing PMI rose to 48.3 in August from 46.1 in July, the first meaningful improvement in months and the highest reading since January. It remains below the 50 threshold that separates expansion from contraction, yet the direction matters: new orders and exports fell more slowly, firms pared back headcount at a gentler pace, and managers described a sector that is no longer deteriorating quite so quickly. The data were released September 2, 2025.
Beneath the headline, the anatomy of this “less bad” month explains where labour demand is heading. The new orders index improved to 47.9 from 44.2 and new export orders to 44.8 from 41.9, as manufacturers reported fewer cancellations and a tentative firming in domestic pipelines, even while U.S. tariffs continued to bite on cross-border sales. Employment contracted again, but the jobs index ticked up to 47.6, consistent with selective hiring freezes, attrition not being backfilled, and narrowly targeted reductions rather than broad layoffs. Purchasing and inventory metrics also steadied, with stocks of purchases at 46.3. One warning light flashed brighter: input costs accelerated, with the input price index rising to 61.6, a reminder that any rebound in volumes may collide with squeezed margins.
What It Means for Labour Markets
For Canada’s labour market, this mix usually translates into a very specific staffing cycle. When output is still contracting but stabilizing, operations leaders pivot from blanket cuts to surgical adjustments. That typically lifts demand for temporary and contract talent before permanent hiring recovers—think maintenance technicians to clear backlogs, quality and EHS specialists to protect yields, and procurement analysts to renegotiate inputs as price pressure returns. Export-exposed firms stay cautious; domestically oriented producers and those tied to infrastructure and utilities tend to move first. Recruiters should expect shorter requisition lead times and more project-based scopes as CFOs protect cash while testing the waters.
This picture aligns with the Canadian Staffing Journal’s own pulse check. The CSJ Hiring Index recently sat at 5.4 out of 10—sub-par but improving—mirroring PMI’s “less negative” tone. In prior cycles, that level has coincided with clients reopening paused searches, converting critical temp roles, and re-commissioning engineering projects that were deferred in the spring. The practical implication is to prepare for uneven, sector-by-sector thawing rather than a broad hiring snap-back: aerospace and autos remain tariff-sensitive; food processing and essential consumer goods are steadier; industrial engineering continues to carry a premium where capex pipelines are intact.
Cost dynamics deserve special attention from both employers and agencies. With input prices re-accelerating, plant managers will re-run make-versus-buy math and lean into variable labour to preserve gross margins. That favours contingent staffing models with clear productivity metrics, fixed-fee projects for maintenance turnarounds, and flexible shift coverage in logistics and inventory control. Wage inflation is not the immediate driver here; price pressure is upstream, but candidates with multi-skilled profiles will command scarcity premia as manufacturers hire “fewer, better” to do more with less.
If the PMI continues to crawl toward 50 over the fall (a plausible path if domestic demand holds), the hiring baton will pass from temporary to permanent placements in operations, reliability, industrial engineering, and supply-chain optimization. Should tariffs intensify or exports relapse, the floor under demand is likely to be domestic rebuild work, public-sector infrastructure, and defensive consumer goods, again favouring contractors and temp-to-perm pathways. In other words, the next leg is about agility: smaller requisitions, faster cycles, and recruiters embedded in plant-level problem solving rather than just requisition filling.
For now, August’s report does not call a turn; it sketches a landing zone. Factories are still shrinking, just more slowly. That nuance matters for labour planning. Staffing firms that align with plant managers’ immediate constraints such as clearing maintenance backlogs, protecting first-pass yield, unblocking inbound materials, and quantifying the ROI of every head added, will be the first to see green shoots.
Everyone else will still be waiting for the line to cross 50.