Canada Sheds 68,300 Jobs in September as Unemployment Rises to 6.5%

Ottawa: Canada’s economy shed a net 68,300 jobs in September, the second consecutive monthly decline, as the unemployment rate edged up to 6.5%, Statistics Canada reported on Friday. The surprisingly weak Canada jobs report has cooled expectations of a Bank of Canada interest-rate increase at its meeting later this month.

FAKTA

• Jobs lost: 68,300 in September, following a decline of 41,700 in August — versus analysts’ forecast of a 9,200 gain.
• Unemployment: rose to 6.5% from 6.4% in August, matching expectations.
• Year so far: a net 41,200 jobs have been lost in 2026, compared with a gain of 211,300 in the same period of 2025.
• Sector hit hardest: educational services (-35,000), health care and social assistance (-23,000), manufacturing (-12,700).
• Rates: money markets no longer price in a Bank of Canada hike this month; a 25-basis-point increase in December is now expected.

September wiped out the year’s gains

According to Reuters, the unexpected drop has effectively erased all the employment gains recorded earlier this year. The losses were split almost evenly between full-time work, down 35,000, and part-time work, down 33,000, Statistics Canada said.

The federal agency also reported that the employment rate — the share of Canadians aged 15 and older who are working — fell 0.2 percentage points to 60.6%, marking a second straight monthly decrease. The participation rate fell 0.2 points to 64.8%, its lowest level since December 1997 excluding the pandemic year of 2020, with the agency citing an aging population as a key driver.

What the Canada jobs report means for interest rates

Money markets moved quickly after the release. Traders are no longer pricing in a rate increase from the Bank of Canada this month, Reuters reported, although markets now expect a 25-basis-point hike in December. Two-year Canadian government bond yields fell 9.5 basis points to 2.410% after the data.

Royce Mendes, head of macro strategy at Desjardins, said in a note that Canadian central bankers would likely need to keep rates unchanged this month given the deterioration in the labor market, adding that higher energy prices could force officials to tighten policy later.

Andrew Grantham, senior economist at CIBC Capital Markets, argued the weakness looked more like data volatility than tariff damage so far, but said the report supported his call that the Bank of Canada would keep interest rates on hold at its remaining meetings this year.

Young workers and the public sector hit hardest

The decline was concentrated among young people and the public sector. Employment among Canadians aged 15 to 24 fell by 48,000, while employment of women aged 25 to 54 dropped by 28,000, according to Statistics Canada.

Educational services recorded the largest industry decline with 35,000 fewer positions, which the agency partly linked to a smaller number of international students entering Canada. Health care and social assistance fell by 23,000 — its first monthly decrease since December 2022.

September labor market at a glance

The tariff factor

September was the first full month after a new round of United States tariffs took effect against Canada. Yet, according to Reuters, the largest job losses were in the public sector rather than US-facing industries. Economists quoted by Reuters said the latest tariffs were unlikely to have a major impact on employment data in the coming months.

Manufacturing, a sector partly exposed to the tariffs, lost a net 12,700 jobs. The Canadian dollar weakened 0.44% to C$1.4287 per US dollar after the report, or 69.99 US cents.

Wages rise as finding work gets harder

Growth in average hourly wages for permanent employees accelerated to 2.3% year on year from 2.0% in August, a closely watched measure of inflation pressures. At the same time, Statistics Canada’s job-finding rate — the share of unemployed people who found work in September — fell to 30.6%, down from 32.8% a year earlier and well below the 36.5% pre-pandemic average.

For context, the unemployment rate peaked at 6.9% in April before declining to 6.4% in July and August; September’s 6.5% reading matches where the year began.

Rate pressure is a global theme right now — read our coverage of US mortgage rates hitting a three-year high of 7.28% for the American side of the story.

Conclusion

Two weak months have not yet reversed Canada’s overall trajectory — employment remains up year on year — but September’s surprise 68,300-job drop has shifted the policy conversation from rate hikes to patience. With the Bank of Canada meeting at month’s end and elevated energy prices still threatening inflation, the central bank faces a delicate balancing act through the final quarter of the year.

Frequently asked questions

How many jobs did Canada lose in September 2026?

Canada lost a net 68,300 jobs in September, according to Statistics Canada, following a 41,700-job decline in August.

What is Canada’s unemployment rate now?

The unemployment rate rose to 6.5% in September from 6.4% in August.

Will the Bank of Canada raise interest rates in October?

Money markets no longer expect a rate hike at the bank’s meeting this month, though a 25-basis-point increase in December is now priced in.

Which sectors lost the most jobs?

Educational services lost 35,000 positions, health care and social assistance lost 23,000, and manufacturing shed 12,700 jobs.