Canada’s consumers appear to be stepping more lightly as summer fades, and hiring firms are growing cautious. New data from a consumer‐spending tracker by RBC reveals that while spending remains overall positive, growth has decelerated. At the same time, labour market indicators—including the recent CSJ Hiring Index—suggest employers are composing fewer job offers and surveying the horizon warily.
According to RBC’s latest analysis of card‐transaction data, core retail spending (excluding autos and gas) rose only 0.4 percent in August over July, a sharp deceleration from the 1.1 percent growth seen the previous month. More broadly, total consumer spending fell by 2.2 percent month over month in August, reversing July’s gains. The three‐month moving average has now shown slowing growth for core categories for three months in a row, marking a clear shift in momentum.
Essentials are softening more than discretionary items. Spending on groceries has flattened since May, and gas‐station purchases have been falling for months, driven in part by the end of the consumer carbon tax. By contrast, purchases of clothing have accelerated, though growth elsewhere in services and non‐essential goods has lost steam. Consumer confidence remains fragile. Surveys from the Conference Board of Canada and the Bank of Canada show elevated fears of job losses, alongside more modest expectations about finances and spending.
Regionally, all provinces have shown slowing spending, though differences are notable. Saskatchewan and Manitoba saw month‐over‐month drops (on a three‐month average basis), while Atlantic Canada has held up relatively better. Ontario is of particular interest; despite being the locus of recent employment losses and trade tensions, consumers there have not yet meaningfully reduced spending relative to many other regions.
Implications for Hiring and the Labour Market
These spending trends carry weight for the labour market. Consumer demand drives much of what motivates hiring, especially in retail, hospitality, and service‐oriented industries. When spending growth slows, especially in essential categories that tend to stabilize income flows, firms may hesitate to commit to new hires, especially for full‐time or permanent roles.
The CSJ Hiring Index adds to this picture. In August 2025, the Index fell to 4.8 out of 10, down from 5.4 in July. This marks its lowest reading in over a year, reflecting weakening manufacturing and service sector activity. The hiring appetite among Canadian firms is softening. Indicators such as rising unemployment, easing job vacancies, and more modest wage increases all help explain this slide.
In July, statistics from Canada’s Labour Force Survey also showed employment fell by about 41,000, largely driven by youth and certain service sectors. The unemployment rate stood at 7.1 percent, and many of the gains made earlier in the year have halted.
What This Means Going Forward
A number of strands are converging to suggest a more cautious period ahead. With consumer spending moderating, especially on essentials, and business sentiment dampening, hiring is unlikely to surge in the near term. Firms may keep relying more on contract, part‐time, or temporary arrangements rather than committing to permanent full‐time roles. Regions already showing weakness (notably Ontario and British Columbia) may see hiring pullbacks first.
On the flip side, sectors tied to infrastructure, construction, or anchored local demand may offer pockets of stability. Wage growth, though modest, remains positive, which helps to cushion households. Still, pressure points remain: inflation and cost of living, debt service burdens, and for many, the lingering psychological stress of uncertain economic prospects.
For job‐seekers, preparation will matter more than ever. Flexibility, skills in demand (especially in services, healthcare, logistics, etc.), and readiness for non‐traditional or contingent work may be critical. For policymakers, balancing support for consumption (without fueling inflation) and maintaining labour demand will be a delicate task.
As summer turns to fall, Canada faces a test of resilience. The economy is not collapsing, but momentum has clearly eased. The interplay between how much people spend and how willing employers are to hire will determine whether the country slides into a gentle slowdown or staggers into something more severe.