Statistics Canada reports a second consecutive monthly decline in employment, with losses among young workers and public-sector employees raising concerns about the country’s economic outlook.
Canada’s labour market suffered an unexpected setback in September, as the economy lost approximately 68,000 jobs and the national unemployment rate increased to 6.5%, according to data released by Statistics Canada on October 9, 2026. The figures mark the second consecutive month of employment declines and reverse much of the momentum the labour market had built earlier in the year.
The latest Labour Force Survey recorded a decline of 68,000 jobs in September, following a loss of approximately 42,000 positions in August. Economists had expected employment to increase, making the latest figures a surprise for financial markets and raising fresh questions about the strength of Canada’s economic recovery. The unemployment rate edged up from 6.4% in August to 6.5% in September. (Statistics Canada; Reuters)
Employment Declines for a Second Consecutive Month
The September decline followed a period of stronger employment growth between April and July, when Canada added approximately 181,000 jobs. However, the losses recorded over the past two months have weakened that progress.
Statistics Canada reported that employment fell by 0.3% in September, bringing the total number of employed people to approximately 21.1 million. The employment rate, which measures the proportion of people aged 15 and older who have jobs, declined by 0.2 percentage points to 60.6%.
Despite the recent slowdown, employment remained approximately 95,000 positions, or 0.5%, higher than a year earlier. This suggests that the labour market has weakened in recent months without completely reversing its year-over-year growth.
The latest figures also show that job losses were divided almost evenly between full-time and part-time employment. Full-time positions declined by approximately 35,000, while part-time employment fell by around 33,000. (Statistics Canada)
Young Workers Face Significant Job Losses
Young Canadians experienced one of the sharpest declines in employment during September.
Employment among people aged 15 to 24 fell by approximately 48,000 positions, representing a 1.8% monthly decline. This followed another weak month in August, bringing the cumulative employment reduction for young workers over the two-month period to approximately 67,000 jobs.
The youth unemployment rate remained around 13%, indicating that younger workers continue to face considerably greater challenges in finding employment than the national workforce overall.
The figures may reflect a combination of weaker hiring, seasonal changes and reduced opportunities in sectors that traditionally employ younger workers. However, the monthly data alone do not establish a single cause for the decline.
For students, recent graduates and people entering the workforce, fewer available positions can mean increased competition for entry-level jobs and longer job searches.
Public Sector and Manufacturing Report Losses
Public-sector employment accounted for a substantial share of the September decline. Statistics Canada reported that the number of public-sector employees fell by approximately 70,000, marking the fourth consecutive monthly decrease in the sector.
Educational services recorded one of the largest industry-specific declines, losing approximately 35,000 jobs during the month. Employment in healthcare and social assistance fell by another 23,000 positions, while manufacturing employment declined by approximately 13,000.
The education sector has experienced a longer-term reduction, with employment down by approximately 67,000 positions compared with September 2025.
Healthcare employment also declined in September, although it remained higher than a year earlier. The sector recorded annual growth of approximately 3.2%, demonstrating that a single monthly fall does not necessarily indicate a sustained long-term contraction.
Manufacturing losses came after the industry added jobs in August. The sector continues to face uncertainty amid international trade tensions and changing business conditions, although the September figures do not establish that tariffs were the direct cause of the decline. (Statistics Canada)
Regional Employment Trends Show a Mixed Picture
The employment slowdown was not uniform across Canada.
Quebec recorded the largest provincial decline, losing approximately 49,000 jobs in September. Employment also fell by around 20,000 positions in British Columbia and edged down in Ontario.
In contrast, Alberta added approximately 23,000 jobs, an increase of 0.9%. Employment also increased in Newfoundland and Labrador and Prince Edward Island.
The unemployment rate in Ontario remained at approximately 7.0%, while Quebec’s rate increased to 6.0%. Alberta’s unemployment rate fell to 6.4%, reflecting its stronger employment performance during the month.
These differences highlight how labour-market conditions can vary considerably between provinces, depending on local industries, hiring patterns and economic activity.
Labour Force Participation Falls to a Long-Term Low
Another important development was the decline in Canada’s labour force participation rate, which fell to 64.8% in September.
The participation rate measures the share of the population aged 15 and older who are either employed or actively looking for work. Statistics Canada said September’s level was the lowest since December 1997, excluding the exceptional period during the COVID-19 pandemic.
An ageing population is one factor behind the longer-term decline, as a growing proportion of Canadians move into retirement. The participation rate also affects how unemployment figures should be interpreted because people who stop looking for work are generally no longer counted as unemployed.
Average hourly wages among employees rose 2.3% year over year in September, reaching $37.64. Wage growth may provide some support to household incomes, but its impact on purchasing power depends on changes in consumer prices and other living costs. (Statistics Canada)
What the Latest Jobs Report Means for Canada’s Economy
The employment figures provide a new indication that Canada’s economic momentum has weakened after stronger hiring earlier in the year.
A sustained slowdown in employment can affect household spending, consumer confidence and business activity. If job opportunities become harder to find, some households may reduce discretionary spending, potentially putting additional pressure on businesses.
The report may also influence discussions about interest rates at the Bank of Canada. Weaker employment can support the argument for caution when considering further monetary tightening. However, interest-rate decisions also depend on inflation, wage growth, economic output and other indicators.
The September report alone does not determine what the central bank will do next. Policymakers will need to assess whether the employment decline continues and how it interacts with inflationary pressures and broader economic conditions.
Conclusion
Canada’s loss of approximately 68,000 jobs in September highlights the challenges facing the country’s labour market. The second consecutive monthly decline pushed unemployment to 6.5%, while young workers, public-sector employees and several major industries experienced notable setbacks.
Although employment remains higher than it was a year ago, the recent figures suggest that hiring momentum has weakened. Regional differences and continued wage growth offer a more mixed picture than the headline job losses alone.
The coming months will be important in determining whether September represents a temporary setback or part of a longer period of labour-market weakness. Further employment data, inflation figures and Bank of Canada decisions will help clarify the direction of Canada’s economy as 2026 progresses.