Canada loses 68,300 jobs in September as unemployment rate rises
The September job losses erased all employment gains recorded earlier in the year, Statistics Canada said.
OTTAWA · Canada's economy lost 68,300 jobs in September, a second consecutive monthly decline that erased all employment gains made earlier in the year, Statistics Canada reported on Friday. The unemployment rate rose to 6.5 per cent from 6.4 per cent in August. The result was weaker than expected, as analysts polled by Reuters had forecast a gain of 9,200 jobs. The net loss of 41,200 positions so far this year compares to a gain of 211,300 jobs in the same period of 2025.
Job losses were nearly equal between full-time and part-time work. The public sector saw the largest declines, particularly in health care, social assistance and education, a drop Statistics Canada linked to federal cuts to international student permits. Manufacturing, a sector exposed to new U.S. tariffs, lost 12,700 net jobs. The September data covered the first full month after a new round of U.S. tariffs took effect, though economists have said those measures are unlikely to significantly affect employment figures in the near term.
The labour force participation rate fell 0.2 percentage points to 64.8 per cent, its lowest level in 29 years outside of the pandemic. Statistics Canada attributed the drop to an aging population exiting the workforce and slower immigration failing to provide enough replacements. Employment among youth aged 15 to 24 fell by 48,000, following a smaller decline in August. Average hourly wage growth for permanent employees accelerated to 2.3 per cent year over year in September, up from two per cent in August. The weak jobs data altered market expectations for interest rates, with money markets no longer pricing in a Bank of Canada rate hike this month. Markets now anticipate a 25-basis-point increase in December.
"Given the recent deterioration in the labour market, Canadian central bankers will likely need to keep rates unchanged later this month," said Royce Mendes, head of macro strategy at Desjardins. "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." The Canadian dollar weakened following the report, falling 0.44 per cent to $1.4287 per U.S. dollar, or 69.99 U.S. cents. Yields on two-year Canadian government bonds dropped 9.5 basis points to 2.410 per cent.
With files from BNN Bloomberg and CP24