Canadian Employment (September 2026)

Canadian economy sheds jobs in September and the unemployment rate ticks higher   

• Canada’s economy lost 68k jobs in September (-0.3% m/m), well below consensus expectations for a 10k gain. The decline was split between full-time and (-35k) and part-time work (-33k). Private-sector employment rose by 24k, while losses were concentrated in the public sector.  
• The unemployment rate increased to 6.5% from 6.4% in August. The labour force shrank by 53k, and the labour force participation rate fell 0.2 percentage points to 64.8% - 0.4 percentage points below last September's 65.2%. However, Statistics Canada noted that aging demographics were largely responsible for the participation rate having fallen over the past year.  
• Job losses were concentrated in educational services (-35k), health care and social assistance (-23k) and manufacturing (-13k). Offsetting gains were limited, led by other services (+17k), professional, scientific and technical services (+11k), and business, building and other support services (+6k).  
• Average hourly wages rose 2.3% y/y in September, up from 2.0% y/y in August.  
  
   

Key Implications

• The labour market has now taken a breather for two consecutive months. The top line job losses are disappointing, but the focus should be on the unemployment rate. An uptick in September brings it back to where it was in June. We expect it to tread water in the coming months, as trade frictions and higher rates weigh on activity. One positive takeaway from this morning’s report was that private sector employment held steady, despite a decline in the labour force.  
• Ultimately, this report is going to pour some more cold water on near-term rate hike expectations for the BoC. Markets are currently pricing 27% odds of a hike in October, and 88% for December, the latter down from being fully priced yesterday. We maintain the view that inflationary pressures are still relatively contained with average wage growth running at 2.4% and economic growth likely to slow further in Q4 as new tariffs weigh on activity. Given this backdrop we expect the BoC to remain data-dependent and stay on hold in October.       
  
   
   

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