Canada loses 68,300 jobs in September, erasing all gains for the year

OTTAWA — Canada's economy lost a net 68,300 jobs in September, pushing the unemployment rate up and erasing all employment gains recorded earlier this year, Statistics Canada said Friday.

The unemployment rate inched up to 6.5 per cent from 6.4 per cent in August.

The unexpected drop follows a decline of 41,700 jobs in August.

READ MORE: Canada lost 68,000 jobs in September, mostly in public sector

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"Given the recent deterioration in the labour market, Canadian central bankers will likely need to keep rates unchanged later this month," Royce Mendes, head of macro strategy at Desjardins, said in a note.

Analysts polled by Reuters had forecast an increase of 9,200 jobs and an unemployment rate of 6.5 per cent.

With September's decline, Canada has lost a net 41,200 jobs so far this year, compared with a gain of 211,300 in the same period of 2025.

Job losses were split almost evenly between full-time and part-time positions.

The largest job losses were in the public sector, particularly health care, social assistance and education, as the government cut international student permits.

Manufacturing, a sector partly exposed to U.S. tariffs, lost a net 12,700 jobs.

September was the first full month after a new round of U.S. tariffs took effect against Canada.

Economists have said the latest U.S. tariffs are unlikely to have a major impact on employment data in the coming months.

Money markets are no longer pricing in a rate increase from the Bank of Canada this month, although expectations of a 25 basis point hike had edged higher.

Markets expect a 25-basis-point increase in December.

"That said, we expect that higher energy prices will begin feeding other categories of inflation this fall, and could force officials to tighten policy soon," Mendes said.

Labour force participation hits 29-year low

The labour force participation rate, which measures the share of the population either working or looking for work, fell 0.2 percentage points to 64.8 per cent in September.

That is its lowest level in 29 years excluding the pandemic period.

The decline was driven largely by an aging population leaving the workforce and slower immigration reducing the number of replacements.

Employment among young people aged 15-24 fell by 48,000 in September after a smaller decline in August.

Growth in average hourly wages for permanent employees, a closely watched measure of inflation pressures, accelerated to 2.3 per cent year on year in September from two per cent in August, Statistics Canada said.

The Canadian dollar weakened after the report, falling 0.44 per cent to $1.4287 per US dollar, or 69.99 US cents.

Yields on two-year Canadian government bonds were down 9.5 basis points at 2.410 per cent.

The report follows data showing the Canadian economy stalled in July before U.S. tariffs took effect. Yadude Books reported in September that real GDP was essentially unchanged that month.

With files from BNN Bloomberg and CP24