Canada lost 68,000 jobs in September, mostly in public sector

OTTAWA — Canada lost 68,000 jobs in September, raising the national unemployment rate to 6.5 percent from 6.4 percent, Statistics Canada reported Friday.

The decline follows a loss of more than 40,000 jobs in August, meaning the economy has shed more than 100,000 positions over the past two months.

Sal Guatieri, a senior economist at BMO Capital Markets, called the report "quite disappointing."

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"The one interesting point here though that perhaps reduces the severity of the report is that all the job losses were in the public sector," he told CTV News Channel.

Guatieri said that theme has persisted all year, with total employment down 41,000 in 2025, entirely due to public sector losses.

He noted over half of September's losses came from educational services, which he linked to immigration curbs forcing some colleges and schools to lay off workers.

Sébastien Mc Mahon, chief economist at iA Financial Group, said the public sector cuts were not surprising given the federal government's goal to reduce its workforce.

Prime Minister Mark Carney's 2025 Liberal budget pledged to cut the federal workforce by 4.5 percent, or 16,000 jobs, within three years.

"The actual (job loss) number is not as bad as the pullback in the public sector, so there's a few other stories going on," said Mc Mahon.

He argued Canada's economy has shown resilience despite trade tensions with the U.S., pointing to solid momentum in hours worked and non-U.S. trade for goods.

"This year with the tariff situation, Canada's economy has been surprisingly resilient, we have to admit that," he told BNN Bloomberg. "But this is not a booming economy for sure."

While most losses were in sectors not directly hit by tariffs, the manufacturing sector saw a net loss of 13,000 jobs in September.

Mc Mahon said the jobs report takes an interest rate hike off the table at the Bank of Canada's next policy decision later this month.

"Any odds that the Bank of Canada hikes by the end of the year, and we've been in the camp all year that the next hike will be in 2027, not this year, I think we can put those odds to rest," he said.

Garnet Anderson, head of portfolio management at Tacita Capital, agreed. "We were going to be surprised if they actually went forth with a hike, now it would be super surprising if they went forth with a hike in October, it doesn't make sense," he said.

Money markets are not expecting a rate hike at the Bank of Canada's Oct. 28 meeting, Reuters reported, though traders are pricing in a potential increase in December 2026.

With files from The Canadian Press and BNN Bloomberg