Ivey PMI, RBC report highlight challenges around labour market momentum ahead of Labour Force Survey tomorrow
Canadian economic signals turned notably weaker in November, just as markets brace for a critical jobs report that could shape the Bank of Canada’s next move.
The Ivey Purchasing Managers Index (PMI) slipped into contraction territory for the first time in six months, dropping to 48.4 from 52.4 in October, below the 50 line that separates expansion from decline.
The unadjusted Ivey PMI fell even more sharply, down to 44.5 from 51.7, pointing to a broad-based slowdown in activity across purchasing managers surveyed nationwide.
The Ivey Purchasing Managers Index (PMI) is an economic index which measures the month to month variation in economic activity as indicated by a panel of purchasing managers from across Canada, and is prepared by the Ivey Business School.
Labour market momentum within that survey also cooled. The Ivey employment gauge slid to a seasonally adjusted 48.0 in November, down from 51.8 a month earlier, signalling a pullback in hiring intentions even as the reported prices index climbed further to 66.1 from 64.3, a reminder that cost pressures have not fully disappeared.
RBC predicts softer labour market
RBC economists Nathan Janzen and Abbey Xu said in a recent bulletin that Canadian labour markets remain soft overall, with the jobless rate still roughly a full percentage point above what they view as “normal” levels, even after recent improvements.
In their Nov. 28 outlook, RBC highlights that Canada’s unemployment rate sat at 6.9% in October, after 7.1% in both September and August, and they expect it to hold at 6.9% in November as well.
They also point out that Canada’s total employment count was up by 299,000 positions in October compared with a year earlier, underscoring that, despite cooling, the labour market is not collapsing.
Friday’s November labour force survey will be the last major data point before the Bank of Canada’s Dec. 10 interest rate announcement, and the economists emphasize its importance in setting the tone for that decision.
They expect employment growth to be essentially flat in November, following surprisingly strong gains of 67,000 in October and 60,000 in September. With population growth slowing, RBC anticipates fewer new entrants looking for work, which should help keep the unemployment rate steady even if hiring stalls.
Lagging sectors across Canada
RBC’s economists also stress that pockets of weakness are concentrated rather than widespread. Heavily trade‑exposed sectors such as manufacturing and transportation and warehousing have lagged broader job trends for much of this year, but those industries showed “significant improvement in October.”
At the same time, they argue that this underperformance in trade‑sensitive areas has not yet spilled over into the rest of the economy, with layoffs still limited and much of the rise in unemployment reflecting longer job searches for new entrants rather than large rounds of job cuts.
Forward‑looking indicators offer a slightly more encouraging backdrop. The RBC economists cite job‑posting data from Indeed that show “signs of stabilization in hiring demand” and note that business confidence measures have picked up as some of the more severe global trade risks feared earlier this year have failed to materialize. In other words, while conditions are clearly softer, they see a labour market that is cooling rather than cracking.
Wage trends are also in focus. RBC observes that wage growth unexpectedly ticked higher in October but argues that pay increases should “broadly continue to edge lower” in the near term, given that business surveys still point to smaller planned wage hikes. That trajectory, if it continues, would be welcome news for the Bank of Canada as it tries to keep inflation in check without triggering a deep downturn.
U.S. private‑sector hiring stumbles ahead of fed decision
South of the border, a fresh sign of cooling in the U.S. labour market is reinforcing expectations that the Federal Reserve will continue cutting interest rates. Citing data from payroll processor ADP, Forbes reports that U.S. private‑sector employment fell by 32,000 jobs in November, a decline that matched the largest single‑month drop since March 2023 and fell well short of Wall Street’s forecast for a 40,000 job gain.
According to Forbes, firms with at least 50 employees added a net 90,000 workers, but small businesses with fewer than 50 staff cut a steep 120,000 positions, including a loss of 74,000 jobs among companies employing 20 to 49 people. Professional and business services led the way down with 26,000 job losses, followed by information services, manufacturing, financial activities and construction.
Pay growth has also eased in the U.S. numbers cited by Forbes. The outlet notes that year‑over‑year wage gains slowed to 4.4% in November for workers who stayed in their jobs, down 0.1 percentage point from October.
“Hiring has been choppy as of late as employers weather cautious consumers and an uncertain macroeconomic environment,” say ADP chief economist Nela Richardson.
