Canada sheds 68,000 jobs in September as unemployment rises to 6.5%

Canada's labour market weakened for a second straight month in September. Statistics Canada's Labour Force Survey, released Friday, showed employment fell by 68,000, or 0.3%, after a loss of 42,000 jobs in August. The unemployment rate rose 0.1 percentage point to 6.5%, back to where it stood in January.

Together, the two monthly declines erase more than half of the 181,000 jobs added between April and July. Employment is still 95,000, or 0.5%, higher than a year earlier.

Numbers versus expectations

Economists had expected the opposite. The consensus forecast called for a gain of about 9,200 jobs, according to a report in Investment Executive. The unemployment rate itself matched forecasts of 6.5%.

• Full-time jobs: down 35,000; part-time jobs: down 33,000
• Youth (15 to 24): down 48,000, a second monthly decline
• Participation rate: 64.8%, the lowest since December 1997 outside of 2020, which Statistics Canada attributes mostly to population aging
• Average hourly wages: up 2.3% from a year earlier, to $37.64, after 2.0% in August

Where the jobs were lost

The weakness was concentrated in the public sector rather than in tariff-exposed industries. Educational services shed 35,000 jobs and health care and social assistance lost 23,000. Public-sector employment fell by 70,000, a fourth consecutive monthly decline, while private-sector employment was little changed. Manufacturing lost 13,000 jobs. The main gain came in other services, such as repair and personal services, up 17,000.

Quebec bore the brunt, with employment down 49,000 and its unemployment rate rising to 6.0%. Ontario and British Columbia each lost 20,000 jobs; Ontario's jobless rate stands at 7.0%. Alberta was the bright spot, adding 23,000 jobs.

Rate-hike bets fade

The Bank of Canada has held its policy rate at 2.25% while weighing tariff-driven weakness against price pressures linked to the conflict in the Middle East. Markets had been flirting with an October hike. After the report, the odds of a quarter-point increase on October 28 fell to about 25% from roughly 40% before the data, according to LSEG figures cited by Investment Executive.

"There's no way to sugar coat it. It's a very bad jobs print for September," said Robert Kavcic, senior economist at BMO Capital Markets. TD senior economist Andrew Hencic said the report would "pour cold water on calls for interest rate hikes." The Canadian dollar briefly slipped below 70 cents US, its lowest level since early 2025.

The other side of the story

Not everyone reads the report as a turning point. Kavcic noted the job market looks more resilient once short-term noise is stripped out, and the layoff rate remained near its historical norm at 0.7%, according to an analysis in The Hub. KPMG Canada's Daniel Hyun cautioned that it would be premature to blame tariffs. Wage growth also picked up, which could keep inflation worries alive at the central bank.

The more worrying signal may be the job-finding rate, which slipped to 30.6%, well below the 2017 to 2019 average of 36.5%. In other words, few people are being fired, but those looking for work are having a harder time landing it.

What it means for households

For workers, especially young people and those in education and health care, the market is getting tighter. It is a good moment to review an emergency fund; a common rule of thumb is three to six months of essential expenses.

For borrowers, a weaker job market reduces the odds of a near-term rate hike, though it does not rule one out later this year. Anyone with a mortgage renewal coming up should compare fixed and variable options carefully. This is general information, not personalized advice.

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• Emergency fund in Canada
• Fixed vs. variable mortgage

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