Muhammad Amanullah
Date: October 10, 2026 The True Post (Web News) —Canada’s labour market has recorded a second consecutive month of job losses, with 68,000 positions disappearing in September and the unemployment rate rising to 6.5 per cent.
The economy had already lost 42,000 jobs in August, while economists had expected approximately 9,200 new positions to be created in September. The latest figures have dealt a setback to the improvement seen in the labour market around the middle of this year.
More Than 100,000 Jobs Lost in Two Months
According to Statistics Canada, September’s job losses represented the largest monthly decline since February this year. Before that, employers had added a combined 181,000 jobs between April and July, signalling an improvement in labour market conditions.
However, consecutive job losses in August and September have weakened that positive trend. Despite the recent declines, Canada still had 95,000 more jobs overall than it did in September last year.
The latest report showed that September’s losses included both full-time and part-time positions. A significant share of the decline came from the public sector, indicating that labour market difficulties have not affected all sectors equally.
Unemployment Rate Rises to 6.5 Per Cent
Canada’s unemployment rate increased by one-tenth of a percentage point in September, reaching 6.5 per cent. This brought the rate back to the level recorded in January this year.
The change comes after employment opportunities improved during the early months of the year. Two consecutive months of job losses have raised fresh questions about the pace of economic activity and employment prospects in the months ahead.
Education Sector Hit Hardest
The education services sector recorded the largest employment decline in September, losing 35,000 positions. Employment also fell in healthcare and manufacturing.
In contrast, some service industries, including repair, maintenance, household and personal services, recorded gains. These sectors added 17,000 new jobs.
Although public-sector employment has declined for four consecutive months, signs of stability in the private sector have provided some reassurance to economists. They say it is important to examine the performance of individual sectors separately to understand the overall employment situation.
Quebec Records the Largest Losses
At the provincial level, Quebec experienced the sharpest deterioration in employment, losing 49,000 jobs during September. Ontario and British Columbia each recorded a decline of 20,000 positions.
In contrast, employment opportunities increased in Alberta, where 23,000 new jobs were created.
The differences between provincial employment figures demonstrate that economic conditions are not uniform across Canada, with some regions continuing to record employment growth despite the national decline.
Young Workers Among the Hardest Hit
Young people aged 15 to 24 bore the greatest burden of September’s job losses, with 48,000 positions disappearing in this age group. However, a decline in youth labour force participation meant the unemployment rate for this group did not change significantly, remaining at 13 per cent.
Women aged 25 to 54 were also affected, with employment declining by 28,000 positions.
Regarding wages, the report showed that average hourly earnings increased by 2.3 per cent year over year in September, compared with a 2 per cent increase in August. This means wage growth accelerated slightly despite the decline in employment.
Economists Cautious About Blaming US Tariffs
Trade tensions between Canada and the United States have intensified again, and September’s employment report has emerged against this backdrop. However, most economists have avoided identifying US tariffs as the primary cause of the job losses.
Daniel Hauen, a senior economist at KPMG Canada, said most of September’s employment losses occurred in sectors that are not directly linked to international trade. The significant decline in Quebec’s education services sector was also an important factor.
According to Hauen, it would be premature at this stage to attribute the weakness in employment to tariffs.
Despite the potential economic effects of trade restrictions, economists say the latest figures should be assessed by examining public- and private-sector conditions separately.
Impact on the Bank of Canada’s Interest Rate Decision
September’s employment report provides important information about the labour market ahead of the Bank of Canada’s next interest rate decision, scheduled for October 28. The central bank’s policy rate has remained at approximately 2.25 per cent for nearly a year.
Andrew Hencic, a senior economist at TD Bank, said the weak employment figures released between the central bank’s two policy decisions could reduce pressure for an interest rate increase in the near term.
The central bank is monitoring economic weakness arising from US tariffs, while also assessing the risk of higher prices linked to the war in the Middle East. Recent signals suggest policymakers are also paying close attention to potential inflationary pressures.
TD Bank expects new tariffs could slow economic activity and contribute to keeping inflation under control. On that basis, the central bank could leave interest rates unchanged this month.
Meanwhile, economists at KPMG Canada said the weak employment report had raised some questions about expectations of a 0.25-percentage-point interest rate increase in December. However, the firm still expects the central bank could raise its policy rate to 2.5 per cent by the end of the year to address inflation risks.
September’s figures have highlighted a complicated economic situation for Canada. Job losses point to mounting pressure on economic activity, while rising wages continue to sustain concerns about inflation.
The Bank of Canada’s decision in the coming weeks will help clarify how policymakers intend to balance these competing risks.
