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People line up for booths at a job fair in Toronto earlier this year. Manpower’s quarterly survey shows the weakest hiring plans are in education and manufacturing of non-durable goods.

J.P. MOCZULSKI/The Globe and Mail

The hiring outlook among Canadian employers has ebbed to a two-year low, and weakened in many other countries too, suggesting turmoil in Europe is chipping away at confidence.

A quarterly hiring outlook, to be released Tuesday, shows Canadian hiring intentions for the July-to-August period are softer than the prior quarter and now at the lowest level since the third quarter of 2010.

The findings come after last week's labour force survey showed a slowdown in the pace of hiring in May, following two consecutive strong months, as just six of 16 major industries added to headcount. Some economists, meantime, are lowering their forecasts for Canadian growth as emerging market demand softens and Europe's debt problems intensify.

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Manpower's survey shows the weakest hiring plans are in education and manufacturing of non-durable goods (such as food, clothing and paper). Hiring plans are, once again, brightest in the West, while they are more cautious in Atlantic Canada.

The seasonally-adjusted outlook fell to 12 per cent in the third quarter from 13 per cent in the prior quarter and 16 per cent in the same period a year earlier. Nearly a quarter -- or 23 per cent -- of employers will add to headcount, 5 per cent plan a reduction, 70 per cent see no change and 2 per cent don't know.

By city, the rosiest outlook is in Thunder Bay (a city in northern Ontario which has the second-lowest jobless rate in the province). Employers in St. John's, Regina and Saskatoon also have upbeat plans. The city with the weakest outlook is Brockville, Ont.

The global survey, conducted between April 19 and May 2, found a broadly slower hiring climate. "The debt crisis continues to weigh on the confidence of employers throughout the globe, but especially in the euro zone," it said.

Employers in Greece, Ireland and Spain report the least optimistic global hiring plans. Hiring expectations are strongest in India, Taiwan and Brazil.

Europe's woes are prompting some economists to shave their forecasts. Last week, Bank of Nova Scotia cut its forecast for Canadian growth by a notch, to 2 per cent this year and 2.1 per cent next.

The downgrade reflects weaker-than-expected first quarter growth in both Canada and the U.S., as well as a "more muted growth trajectory" for the second half of the year, it said.

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"Intensifying euro zone debt problems alongside recent signs of softening in emerging market demand is expected to slow the export recovery and add a note of caution to consumer and business spending plans."

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