Second consecutive month of employment losses raises concerns about economic weakness and the impact of U.S. tariffs
Canada’s labour market suffered another setback in September, shedding 68,000 jobs for the second consecutive month of unexpected employment declines, according to new figures released by Statistics Canada.
The national unemployment rate edged up by 0.1 percentage points to 6.5 per cent, returning to its level at the beginning of 2026. The disappointing results sharply contrasted with economists’ expectations of approximately 9,200 new jobs and followed the loss of 42,000 positions in August.
The consecutive declines have raised concerns about the Canadian economy’s resilience, particularly as businesses navigate ongoing trade tensions and tariffs imposed by the United States.
Before the downturn, Canada’s labour market had demonstrated steady growth, adding approximately 181,000 jobs between April and July. Despite the recent losses, overall employment remains 95,000 positions higher than a year earlier.
BMO chief economist Doug Porter described the September figures as disappointing, noting that although monthly employment data can fluctuate considerably, two consecutive months of substantial job losses are unusual. He suggested the results indicate that the economy was experiencing significant challenges heading into the fall.
Employment declines were particularly pronounced in educational services, health care and social assistance, and manufacturing. However, gains in other service industries, including repair and maintenance, helped partially offset the overall losses.
Porter suggested that declining employment in education, particularly in Quebec, could reflect temporary fluctuations or broader challenges associated with reduced international student enrolment.
Meanwhile, CIBC senior economist Andrew Grantham warned that manufacturing job losses could indicate growing pressure from U.S. tariffs introduced in August, although statistical volatility may also have contributed to the disappointing employment figures.
Statistics Canada reported that job losses were distributed across both full-time and part-time positions, with the public sector accounting for much of the decline.
Public sector employment fell by approximately 70,000 positions in September and was down 119,000 compared with the same period last year. Private sector employment, however, recorded modest gains, providing some reassurance amid the broader downturn.
Young Canadians were among those most affected by the weakening labour market. Workers aged 15 to 24 accounted for approximately 48,000 lost positions during September. However, a simultaneous decline in the number of young people participating in the labour force kept their unemployment rate relatively stable at 13 per cent.
Women aged 25 to 54 also experienced significant employment losses, with 28,000 fewer positions recorded in September. At the same time, more women in this age group entered the job market in search of employment.
Provincially, Quebec recorded the largest decline, losing approximately 49,000 jobs, followed by British Columbia, where employment fell by 20,000 positions. Alberta emerged as a notable exception, adding approximately 23,000 jobs during the month.
The latest employment report comes ahead of the Bank of Canada’s next interest rate announcement, scheduled for October 28, and represents the central bank’s final assessment of labour market conditions before that decision.
Economists suggest the latest figures could reinforce expectations that policymakers will maintain their current interest rate stance rather than introduce further adjustments.
Grantham indicated that while statistical fluctuations may explain some of September’s weakness, the employment losses support expectations that the Bank of Canada will keep interest rates unchanged at its remaining two policy meetings this year.
The report underscores the challenges facing Canada’s economy as employment growth slows, public sector positions decline and businesses contend with continued uncertainty surrounding international trade.
Although private sector hiring and Alberta’s employment gains offer some encouraging signs, the loss of 110,000 jobs over two months highlights mounting pressure on the country’s labour market and raises questions about its prospects for recovery in the final months of 2026.
