Canada Jobs Shock: 68K Lost in September Report

Canada's job market delivered a shock on Friday when Statistics Canada reported the economy shed 68K jobs in September, the second straight monthly decline and the steepest single-month loss since February. The Canada jobs report landed far below economist expectations and pushed the unemployment rate up to 6.5 percent, back to where it sat at the start of the year.

The September drop followed a loss of 42K positions in August. Economists surveyed by Reuters had expected a gain of about 9.2K jobs, making the actual Canada jobs report a dramatic miss. The two-month slide wipes out more than half of the 181K positions employers added between April and July, though total employment is still up 95K from last September.

Young workers take the hardest hit

The pain was not spread evenly. Canadians aged 15 to 24 absorbed the heaviest blow, losing 48K jobs for a drop of 1.8 percent, while women aged 25 to 54 saw employment fall by 28K. According to the Labour Force Survey, losses split almost evenly between full-time and part-time work and were concentrated in the public sector, which shed 70K positions — its fourth consecutive monthly decline. Education services accounted for 35K of those losses, with health care and social assistance down 23K and manufacturing off 13K. Only one broad category, the repair and household services group, added jobs, gaining 17K.

The Canada jobs report also exposed a deeper rot beneath the headline numbers. The employment rate fell 0.2 percentage points to 60.6 percent, and the share of unemployed Canadians who found work during the month slipped to 30.6 percent, down from 32.8 percent a year earlier and well below the 36.5 percent average recorded across the pre-pandemic years. Youth unemployment now stands at 13 percent, a warning light for a generation trying to launch careers in an economy with fewer openings and stiffer competition.

Participation sinks to a 29-year low

Perhaps the most alarming figure in the Canada jobs report was the labour force participation rate, which dropped to 64.8 percent — the lowest since 1997 outside of the pandemic. That means a smaller share of Canadians are working or even looking for work than at almost any point in nearly three decades. Statistics Canada attributed the decline mostly to an aging population: people aged 65 and older now make up 23.2 percent of the working-age population, up from 20.5 percent in 2019.

Geographically, the downturn was lopsided. Quebec lost 49K jobs, while Ontario and British Columbia each lost 20K. Manitoba shed 4.4K. The one bright spot was Alberta, which added 23K jobs and saw its unemployment rate fall to 6.4 percent. Average hourly wages rose 2.3 percent year over year to $37.64, a modest cushion for those still employed.

The political reaction was swift. Garnett Genuis, the Conservative shadow minister for employment, issued a statement calling the participation drop a sign of a struggling economy and pointing to 130K jobs lost in Quebec since January. In the statement, Genuis argued that the figures reflect a loss of hope among workers and said it is harder to find work than it has been in a long time.

Tariffs and the Bank of Canada's next move

The Canada jobs report is also the first full survey period capturing the weight of escalating United States-Canada tariffs. Talks with Washington have been off since August, and new American trade measures landed in recent weeks, raising fears that the manufacturing dip is an early warning of heavier pressure to come. Still, economists urged caution about reading too much into one volatile month. Claire Fan, a senior economist at RBC Economics, said the unemployment rate is a more stable and reliable gauge of labour market conditions, and noted that leading indicators such as job openings have not retreated to a problematic extent.

For the Bank of Canada, whose benchmark rate sits at 2.25 percent with the next decision due October 28, the Canada jobs report adds complexity to an already delicate call. Forecasters read Friday's Canada jobs numbers as a reason to hold rather than cut. The next Labour Force Survey release is scheduled for November 6, and until then young job seekers — the hardest hit of all — face a market where the door is closing a little faster each month.

Sources: Canadian HR Reporter: Canada loses 68,000 jobs in September; Conservative Party: statement on the September jobs report