Canada Lost 68,000 Jobs in September. The Public Sector Lost 70,000.
Canada’s September jobs report landed at 8:30 a.m. ET Friday, nowhere near what forecasters had on the board. Employment fell by 68,000 (-0.3%) to 21,105,000, Statistics Canada said in its September Labour Force Survey release. CIBC’s Week Ahead forecast table and RBC’s preview of the report had both looked for a gain of about 5,000, and the Bloomberg consensus CIBC printed beside its own call was +9.2K. That is a miss of roughly 73,000 jobs against the two bank desks and about 77,000 against consensus. The unemployment rate rose 0.1 points to 6.5%, which CIBC called exactly; RBC had looked for 6.4%.
The losses split almost evenly: full-time down 35,000 (-0.2%), part-time down 33,000 (-0.9%). It was the second consecutive decline, after August’s report, when employment fell 42,000. Before these two months the trend ran the other way, employment up 181,000 (+0.9%) from April to July, and the level is still 95,000 higher (+0.5%) than a year ago. The employment rate fell 0.2 points to 60.6%, a second straight fall, though unchanged year over year. The unemployment rate hit a recent peak of 6.9% in April before declining to 6.4% in July and August, and September’s 6.5% is “the same as it was at the start of the year (6.5% in January)”.
The report cuts into the evidence the Bank of Canada was leaning on six weeks ago. Its September 2 deliberations record that “Data since July showed solid job growth, particularly in the private sector. But members agreed that the labour market was still soft, with the unemployment rate around 6½% and subdued wage growth.” Private sector employment has now been little changed for two straight months. The job growth Governing Council leaned on has stopped accumulating.
The public sector lost more jobs than the economy did
Public sector employees fell 70,000 (-1.5%) in September, a fourth consecutive monthly decline, and are down 119,000 (-2.6%) over 12 months, with Statistics Canada noting “most of the decline attributable to employment in educational services”. Private sector employees are 163,000 higher (+1.2%) than a year earlier. Self-employment edged down 23,000 (-0.8%).
Our own arithmetic on the published levels in table 14-10-0288 puts private sector employees at 13,916,000 in September against 13,891,900 in August, up 24,100, a move Statistics Canada does not treat as statistically significant: its analysis covers differences significant at the 68% confidence level, in a survey of about 65,000 households. The public sector shed more jobs on the month than the whole economy did, by 2,000, a gap itself inside the survey’s sampling noise.
Change in public and private sector employment since September 2025, seasonally adjusted. Statistics Canada table 14-10-0288 via the StatCan Web Data Service. The cumulative change from the year-earlier month is our arithmetic on the published levels.
Educational services fell 35,000 (-2.2%) after seven months of little change, half the public sector’s decline on the month, and is down 67,000 (-4.2%) year over year, concentrated in Quebec (-27,000, -7.0%), Ontario (-19,000, -3.2%) and Alberta (-17,000, -9.0%). Health care and social assistance fell 23,000 (-0.8%), its first monthly decrease since December 2022, and is still up 93,000 (+3.2%) over 12 months, the largest single contributor to employment growth over that stretch. Manufacturing gave back 13,000 (-0.7%) after August’s 22,000 gain. The one gain was ‘other services’, repair and maintenance plus personal or household services, up 17,000 (+2.1%) in the month and 32,000 (+4.1%) year over year.
Quebec is the provincial outlier: employment fell 49,000 (-1.1%) after a 19,000 decline in August, is down 130,000 (-2.8%) since January, and its unemployment rate rose 0.4 points in the month to 6.0%, 0.8 points above January. British Columbia fell 20,000 (-0.7%), its first monthly decrease since March. Ontario fell 20,000 (-0.2%) but is up 86,000 (+1.1%) year over year, unemployment little changed at 7.0%. Alberta was the counterweight, adding 23,000 (+0.9%) and 76,000 (+2.9%) over 12 months, unemployment down 0.4 points to 6.4%.
Employment among 15 to 24 year olds fell 48,000 (-1.8%), a second consecutive decline, and that two-month fall of 67,000 (-2.4%) offsets the group’s April to July gains. The youth unemployment rate was little changed at 13.0%, because the youth labour force shrank 50,000 (-1.6%) alongside it. Among core-aged women, employment fell 28,000 (-0.4%) and the unemployment rate rose 0.3 points to 5.3%, though the release notes that rate is 0.5 points lower than a year earlier and 0.6 points below April’s recent peak of 5.9%. Core-aged men went the other way: employment held steady, the number searching for work edged down, and their unemployment rate fell 0.2 points to 5.8%, down 0.3 points year over year.
Hiring is the problem, not layoffs
Employment fell 68,000 while the unemployment rate rose only 0.1 points, because the participation rate fell 0.2 points to 64.8%. Statistics Canada describes that as “the lowest level since December 1997 (when it was also 64.8%), excluding 2020 during the COVID-19 pandemic.”
Over 12 months, the release complicates the discouraged-workers reading that figure invites. In a text box on population aging, Statistics Canada largely attributes the participation decline to the changing age mix: holding the September 2019 age composition constant, the participation rate “would be little changed (-0.1 percentage points) year over year and would be 0.2 percentage points higher than in September 2019.” People aged 65 and older were 23.2% of the working-age population in September, against 20.5% in September 2019 and 14.8% at the turn of the millennium.
The weakness shows up somewhere more specific. The job-finding rate, the share of people unemployed in August who were working in September, was 30.6%. That is down from 32.8% a year earlier and well below the 36.5% average over 2017 to 2019. The layoff rate was 0.7%, which Statistics Canada calls “similar to the rate observed a year earlier (0.6%) and the average during the period from 2017 to 2019 (0.6%) (not seasonally adjusted)”. Canadians are not losing jobs at an unusual rate. The ones already out of work are failing to get hired.
The wage line went the other way
Average hourly wages rose 2.3% year over year in September, up $0.86 to $37.64, “following growth of 2.0% in August (not seasonally adjusted)”. The run into it reads 3.3% in June, 2.8% in July, 2.0% in August, now 2.3%. Our own arithmetic on table 14-10-0063 puts September at 2.34% against August’s 1.96%, and the median hourly wage up 2.60%.
Treat that uptick as the deceleration stalling, not as pay accelerating. One month is one month.
Average hourly wage growth against inflation, year over year. Statistics Canada tables 14-10-0063 (v2132579) and 18-10-0004 (v41690973), via the StatCan Web Data Service. Both series are unadjusted for seasonality; the year-over-year changes are our arithmetic. Wages through September 2026, CPI through August 2026.
What has not changed is that pay is losing to prices. On our arithmetic across StatCan tables 14-10-0063 and 18-10-0004, August nominal growth of about 2.0% against all-items CPI of 3.0% works out to about -1.0% in real terms, the weakest since January 2023 (-1.4%) and negative in three of the last four months, June the only positive. Across that August cross-section, 13 of the 16 industries Statistics Canada publishes had wage growth below 3.0% inflation, the exceptions being agriculture (+6.2%), finance, insurance and real estate (+5.2%) and public administration (+3.4%).
What October 28 now turns on
The Bank of Canada has held at 2.25% since October 30, 2025, and went into that decision split on exactly this question. “Members shared a range of views on how new US tariffs would affect growth and whether the resulting weakness in the economy would contain the pass-through of higher energy prices,” the deliberations record. The case on one side: “With the economy still in excess supply and the labour market soft, weaker growth from the trade conflict could keep inflationary pressures contained. However, if higher energy prices did spill over into other components of the CPI, members agreed that it could require a monetary policy response to prevent broad-based inflation from setting in.” Members left it unsettled, saying they “would need to watch carefully” whether “energy inflation passes through to other goods and services”. This report is evidence for the containment side, not a settlement.
The other side is the price risk. The Bank’s September 2 statement said CPI inflation “has been hovering around 3% in recent months, mainly because of persistently higher gasoline prices”. In the August CPI, inflation excluding gasoline rose to 2.4% from 2.2% in July while CPI-trim held at 1.9% and CPI-median at 2.0%, so one of those three moved the hawkish way.
Writing before this report, CIBC’s Avery Shenfeld put the case for weighting slack this way: “unlike the US, there are more reasons for the Bank of Canada to look to economic slack to curtail the passthrough of energy prices into a broader inflation uptrend.”
The deliberations are plain about how the two get weighed: the stance of policy “will be guided by the Bank’s inflation forecast and the risks around it. Any weakness in growth will be factored into the forecast for inflation, as will the impact of developments in energy prices.” A jobs report this weak does not vote on October 28 on its own account. It votes through the inflation forecast.
Before this report landed, the futures market had been pricing an increase by December, a path built out of one-month CORRA contracts. Which way it moves reaches rate-sensitive equities, Canadian REITs among them.
The next jobs report is November 6, after Council has decided. The September CPI on October 19 is the last major reading before the October 28 announcement, which comes with a Monetary Policy Report at 09:45 ET.
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