Unemployment edged up to 6.5% and participation fell to its lowest since 1997 outside the pandemic. The losses were concentrated in the public sector, among young workers and in Quebec.

Canada lost 68,000 jobs in September, Statistics Canada reported October 9, the second consecutive monthly decline and a sharp miss against economists' expectations for a gain of about 9,200. The unemployment rate rose slightly to 6.5%.

A two-month reversal

August's loss of roughly 42,000 jobs brings the two-month decline to about 110,000. By The Hub's count, that more than reverses the 181,000 jobs added between April and July. Employment is still 95,000 higher than a year earlier, but Reuters calculated that Canada has recorded a net loss of about 41,200 jobs so far this year, against a gain of 211,300 over the same period in 2025.

Where the losses landed

The public sector accounted for the bulk of the damage, shedding 70,000 positions, its fourth straight monthly drop and 119,000 fewer than a year ago, while the private sector added some jobs and held steady. By industry, educational services lost 35,000 jobs, health care and social assistance 23,000, and manufacturing 13,000. Statistics Canada linked part of the education decline to fewer international students arriving in the country.

Young workers and women in their prime working years took the biggest hits. Employment among people aged 15 to 24 fell by 48,000, or 1.8%, bringing the two-month decline to 67,000, and the youth unemployment rate stood at 13.0%. Employment among women aged 25 to 54 fell by 28,000, lifting their unemployment rate 0.3 points to 5.3%.

A regional split

Quebec shed 49,000 jobs in September, bringing its losses since January to about 130,000 and lifting its unemployment rate to 6.0%. British Columbia lost 20,000 and Ontario another 20,000, though Ontario is still up 86,000 on the year with unemployment at 7.0%. Alberta moved the other way, adding 23,000 jobs and lowering its jobless rate to 6.4%.

Why the unemployment rate is the steadier gauge

The participation rate fell to 64.8%, its lowest since December 1997 outside the pandemic year of 2020. Statistics Canada attributed much of the year-over-year decline to population aging, with people 65 and older now 23.2% of the working-age population, and to slower immigration. That is why some economists argue the unemployment rate, which has barely moved, is a more reliable read on labour market conditions than the headline job count. The layoff rate of 0.7%, similar to a year earlier, also hasn't pointed to a broad wave of firings.

What it means for employers and the Bank of Canada

For employers, the data fits what small-business surveys have been showing: CFIB's September barometer found 12% of firms planning to hire against 18% planning layoffs. For the Bank of Canada, it complicates an already difficult decision on October 28. Markets trimmed the odds of an October rate hike after the jobs report, but with inflation at 3.0% in both July and August, and Governor Tiff Macklem saying this weekend that the Bank's inflation forecast will rise significantly, the case for tightening hasn't gone away. Statistics Canada's September inflation report arrives Monday.