Manufacturing firms are cutting production, this is what it means for the staffing industry
June 2025 - Manufacturing PMI
Montreal, July 5, 2025 — The latest Canada Manufacturing PMI dropped to 45.6 in June, down from 46.1 in May, marking the fifth consecutive month of contraction in the manufacturing sector. A reading below 50 signals declining activity, and the newest data shows deeper erosion, especially when it comes to output and exports.
New export orders fell sharply to 40.2, reflecting subdued international demand—particularly from the U.S., which receives 75 % of Canadian exports.
Output plunged to 42.6, its lowest since May 2020, driven by trade barriers and weaker global demand.
Production and new orders also posted steep declines, amplifying business uncertainty.
The employment sub-index in manufacturing continues below 50, signaling job losses—manufacturers are cutting roles as they scale back production. Although we lack a precise June figure, May’s data showed employment at 44.9, the weakest point since June 2020. For recruitment firms in Canada, this means fewer permanent hires in manufacturing lines, rising risk of contract reductions, and increased demand for exit or transition support services (outplacement, reskilling). Recruitment activity keeps shifting toward temporary or part-time staffing, as firms seek flexibility amid cost pressure.
Where do we see growth/decline?
While steel, aluminum, and automotive-related manufacturing continue contracting as hit hard by the 50 % US tariffs, some sub-sectors such as food processing, pharmaceuticals, or high-tech components are showing more resilience as they are focused on domestic demand. That said, broad trade uncertainty and input delays have stretched lead times, and raw materials inventories are at five‑year lows.
In essence, we can see two different phases on how this will evolve which are based on the timeframe:
Short term (0–3 months): Expect further hiring freezes or downsizing across export‑oriented manufacturing. Recruiters should pivot to offering services in severance support, outplacement, and interim staffing.
Medium term (3–12 months): As trade negotiations progress—particularly the US–Canada trade deal targeted by July 21—confidence may recover marginally. If a tariff resolution materialises, reshoring activity or investment in domestic supply chains could boost hiring in upstream logistics, compliance, and warehousing roles. Recruiters should cultivate multi-sector pools and flexible talent networks.