Consumer spending is still strong, which means steady hiring in select areas
RBC consumer spending report
Even as economic headwinds swirl, from lingering tariff concerns to fragile consumer sentiment, Canadians continue to spend. A recent report by the Royal Bank of Canada (RBC) shows a surprising resilience in consumer spending as we roll into the third quarter. This sturdy demand offers both lifelines and cautionary signals for the labour market, particularly for employment agencies and staffing firms that navigate shifting tides of hiring needs.
A Rebound in Spending, with Pockets of Strength
RBC’s Consumer Spending Tracker reveals that in July, cardholder spending in Canada bounced back, with core retail sales (excluding autos and gasoline) rising 1.1%, reversing a dip in June. On a broader scale, total card spending clocked in at 2% above the second-quarter average, signaling a promising start to Q3.
Certain categories stand out for their performance: travel spending rebounded, while entertainment and the arts continued to gain momentum. Meanwhile, purchases at the pump fell, as gasoline prices eased following a June spike.
Despite the monthly volatility, the three-month rolling average for spending remains healthy at +0.9%, underpinning RBC’s expectations of continued but modest growth through late 2025. Threats loom, however: international trade disruptions remain a wild card, even as there are signs of stabilizing labour markets and rising consumer confidence from spring’s record lows.
What It Means for the Labour Market
One of the main takeaways; there is steady hiring through fluctuations and uncertainties.
Consumer resilience, especially in discretionary areas like travel and entertainment, often translates into stronger demand for staff. Retailers, service providers, and hospitality businesses may lean on staffing agencies to fill roles during this uplift, helping staffing firms build pipelines even amid broader economic uncertainty.
In sectors where spending is rising, temporary and part-time roles (think event staff, trainers, hospitality workers) can quickly drive demand, yielding opportunities for agencies with flexibility and regional reach.
That being said, RBC cautions that international trade disturbances may sap spending resilience later in the year, adding uncertainty for employment trends. Previous analyses show that trade shocks tended to hit manufacturing and autos hardest, with limited spillovers into broader service sectors so far. But staffing firms must brace for uneven impacts: a downturn in manufacturing could reduce demand in specialized hiring, while service-heavy segments safeguarded so far may also feel pressure.
Amid resilient spending, RBC’s broader labour indicators suggest a cautiously steady outlook. Consumer sentiment, especially around job availability, holds weight. A rising share of Canadians saying jobs are “hard to get” signals latent risk: though unemployment remains low, these sentiment metrics often correlate tightly with future joblessness.
For staffing agencies, shifting sentiment can herald slower candidate placement, especially if job seekers lose confidence or employers dial back hiring.
Spending recovery in travel, arts, and leisure suggests durable demand in those sectors. Specialized staffing firms focusing on those areas may benefit from a growth tilt. Conversely, auto-related hiring, reflecting weak auto sales and cooling gasoline spending, may stay flat or contract.
Beneath the steady hum of July’s spending rebound lies a complex patchwork of strengths and potential soft spots, one that staffing firms must navigate with agility. As Canadians resume discretionary outlays on travel and leisure, the labor market’s buoy offers fertile ground for hiring, but it’s not without its riptides.
Tariffs and trade uncertainty remain stealth factors that could quickly shift hiring orders. Meanwhile, consumer sentiment about job availability serves as a subtle, but powerful tremor that may presage changes in unemployment and hiring appetite.
For staffing firms, the path forward lies in nimble adaptation: leaning into sectors showing real growth, monitoring trade and sentiment indicators, and building flexibility across staffing categories. When consumer dollars flow, jobs follow. The savvy staffing agency will be ready to flow with them and pivot when currents change.