Canada's economy lost 68,000 jobs in September, the second monthly drop in a row, and the unemployment rate rose to 6.5 per cent, Statistics Canada said on Friday in its Labour Force Survey. Economists had forecast an increase of 9,200 jobs, CBC News reported. August's loss was 42,000. Before those two months, employment had grown by 181,000 from April to July.
The number is poor. The composition is more interesting.
The public payroll did the damage
Statistics Canada said the number of public-sector employees fell by 70,000, or 1.5 per cent, in September, the fourth consecutive monthly decline for the sector. That is slightly more than the whole drop in employment of 68,000. The agency said the number of private-sector employees was little changed for a second month, though still up by 163,000, or 1.2 per cent, from a year earlier. Self-employment edged down by 23,000.
Public-sector employment is down 119,000 from a year ago, most of it in educational services. By industry, educational services lost 35,000 jobs in September, health care and social assistance 23,000 and manufacturing 13,000. "Other services," which includes repair and personal services, added 17,000. The agency reported that employment fell in Quebec by 49,000 and in British Columbia by 20,000, and rose in Alberta by 23,000.
Doug Porter, chief economist at BMO, told CBC the fall in education jobs, concentrated in Quebec, could be a blip, though it could also point to weakness linked to fewer international students. He called the private-sector steadiness a silver lining.
Who lost work
The decline was concentrated among young people. Employment for those aged 15 to 24 fell by 48,000, or 1.8 per cent, the second consecutive monthly fall, for a cumulative drop of 67,000 over two months. The youth unemployment rate was little changed at 13.0 per cent because the number of young people in the labour force also shrank, by 50,000. Women aged 25 to 54 had 28,000 fewer jobs, and their unemployment rate rose 0.3 percentage points to 5.3 per cent.
Full-time employment fell by 35,000 and part-time by 33,000. Average hourly wages for employees rose 2.3 per cent from a year earlier to $37.64. The job-finding rate, the share of those unemployed in August who found work in September, was 30.6 per cent, down from 32.8 per cent a year earlier and below the 36.5 per cent average of 2017 to 2019, Statistics Canada said.
A participation rate at a 1997 low
The labour force participation rate fell 0.2 percentage points to 64.8 per cent, the lowest since December 1997 apart from 2020, Statistics Canada said. The agency attributed the year-on-year decline largely to population aging: people 65 and older made up 23.2 per cent of the working-age population in September, up from 20.5 per cent in September 2019. Holding the 2019 age mix constant, it said, the rate would have been little changed from a year earlier.
That matters for reading the headline figures, because a shrinking labour force can hold the unemployment rate down even as employment falls. The rate at 6.5 per cent is where it stood in January. It peaked at 6.9 per cent in April and was 6.4 per cent in July and August.
Tariffs or noise
Economists were divided on how much to read into it. BMO's Porter said job figures are often volatile, especially in recent years, but that it is rare to see two months of losses this size in a row: "There's no question, this is a disappointing result." CIBC senior economist Andrew Grantham said the manufacturing losses could be a sign that new tariffs in effect since August are taking a toll, though in a note to investors he wrote that the weakness was "likely more a reflection of data volatility than the impact of new U.S. tariffs."
Factory employment is also the subject of two live disputes in Ontario: Stelco's layoffs at Hamilton, and a strike vote at Stellantis over the idled Brampton plant, set for 17 and 18 October.
The report is the Bank of Canada's last look at the labour market before its interest-rate decision on 28 October. Grantham said that, despite the volatility, the weak jobs figure will probably keep the central bank from making any rate moves in the near future, CBC reported.
For workers the immediate question is whether the public-sector decline, now four months old, continues. It is a different kind of weakness from a tariff shock: it reflects budgets and enrolment rather than orders. The private sector, the part of the economy most exposed to trade, has so far held its ground. One more month of flat private-sector employment would support the volatility reading. A fall would not.
Employment, unemployment, participation, sector, age, province, public-sector, wage and job-finding figures are from Statistics Canada's Labour Force Survey for September 2026, released on 9 October 2026. The expectation of a 9,200 gain, the comments of Doug Porter of BMO and Andrew Grantham of CIBC, and the Bank of Canada's 28 October decision date are from CBC News on 9 October 2026. The comparison of the public-sector fall with the total fall is this publication's observation. The analysis is our own.
Topics worldcanadajobslabour markettariffs
