The Mid-February Pulse: industrial thaw and the public sector pivot
Mid-February 2026 presents a Canadian economy moving at two distinct speeds. While certain industrial sectors are finally shaking off a year-long slumber, the public sector and broader labor market continue to grapple with the friction of a massive structural realignment.
Below is a recap of the key developments and deep-dives from the past month.
Staffing firms that won the most federal contracts in the past 4 months
Our recent study into federal procurement highlights a concentrated reliance on a select group of top staffing firms to manage the government’s professional and technical needs. As transparency rules tighten and pricing becomes key, the relationship between the public service and third-party talent providers is evolving.
- Compliance & Pricing: Public Services and Procurement Canada (PSPC) is pushing for greater pricing accountability. Firms like Randstad, Procom, Altis Recruitment and others holding major contracts are now navigating a more rigorous reporting environment.
- Steady volumes: $12M of contracts were awarded to a dozen staffing firms in the past 4 months, showing resilience in spending in some categories despite the targeted workforce reductions in the public sector
Labour Force Survey: the friction of realignment
The national unemployment rate fell slightly to 6.5% in January, but the underlying data reveals a complex duality in the workforce. Employment in manufacturing and public administration saw notable declines, while private service sectors picked up the slack.
- Public Sector Contraction: Public administration shed roughly 10,000 positions this month, a trend that aligns with the ongoing federal workforce adjustment. This is releasing a significant pool of experienced professional talent into the private market.
- The Participation Metric: While the headline rate dropped, the overall participation rate is the metric to watch as workers transition between shrinking government roles and expanding industrial sectors.
The PMI pivot: A turning point for manufacturing?
After an 11-month contraction, the manufacturing sector has finally shown signs of stabilization. The S&P Global Canada Manufacturing PMI rose to 50.4 in January, signaling a marginal expansion that effectively ends the longest downturn since the 2008 financial crisis.
- The Talent Thaw: The employment sub-index within the Ivey PMI remains in positive territory at 50.9, suggesting that the "talent freeze" of late 2025 is beginning to thaw as firms move from a posture of survival toward cautious output planning.
- Input Costs: While activity is up, businesses are still contending with rising supplier lead times, which may create a bottleneck for those attempting to scale up too quickly in Q1.
The 2026 EV strategy: From mandates to incentives
The federal government has officially launched its foundational Automotive Strategy to address the recent decline in domestic electric vehicle sales. This pivot marks a transition toward a $2.3-billion incentive structure known as the Electric Vehicle Affordability Program (EVAP).
- Domestic Protection: The new policy waives the $50,000 price cap for Canadian-made vehicles, a strategic move designed to protect local manufacturing jobs and stabilize the domestic supply chain amidst global trade volatility.
- Infrastructure Push: Alongside consumer rebates, a $1.5-billion expansion of charging networks aims to resolve the "range anxiety" that stalled adoption rates throughout 2025.