Canada’s job market continues to stumble, erasing any gains made year-to-date. Statistics Canada’s (StatCan) September Labour Force Survey (LFS) shows a sharp drop in employment. Public sector workers and young adults carried virtually all of the pain.
Canada Lost 110,000 Jobs In Just Two Months
Source: StatCan; Oxford Economics.
The agency reported that seasonally adjusted employment fell 0.3% (-68.3k jobs) to 21.11 million in September. This follows the 41,700 jobs lost in August, adding up to a whopping 110,000 jobs lost in the span of just two months. The abrupt decline rolls back roughly 61% of the jobs added between April and July, leaving annual employment growth just 0.5% (+94.9k jobs) higher than last year. For context, the country’s population added roughly 189.4k over the 12 months ending September 1st.
The decline surprised the market consensus that expected 10,000 jobs to be added, according to National Bank Financial (NBF). “… the renewed strength in the labour market this summer may have been overestimated,” explains NBF Deputy Chief Economist Matthieu Arseneau and Senior Economist Alexandra Ducharme.
Canada’s Job Losses Are Mostly Public Workers and Entrepreneurs
Source: StatCan.
StatCan notes the public sector lost 70,000 jobs in September, its fourth consecutive drop. The monthly drop more than accounts for the loss last month, the entire sector shrinking 2.6% (-118.7k jobs) in the past year. It’s unclear what share of last month’s drop was expected, as the end of Census 2026 was expected to reduce the size of the sector.
The agency also reported a loss of 22,500 self-employed workers last month, and 24,100 private sector jobs gained. The latter was “little changed,” according to StatCan, meaning it wasn’t statistically significant relative to the sector’s size.
Education shed 35,000 jobs, despite recent total enrollment data showing growth instead of an expected contraction. Education “often shows volatility at the start of a new school year,” notes Tony Stillo, Director of Canada Economics at Oxford Economics.
Healthcare and social assistance (-23,000) represented the second largest loss of any sector. However, the sector is far from hard hit—over the past year, it added 93,000 jobs against a national gain of just 95,000. Last month’s drop was the first it has seen since December 2022.
Youth Job Losses Lead, Work Gets Harder To Find
The vast majority of jobs lost last month were held by young adults, who represented 70% of the month’s net decline. Despite the loss, the youth unemployment rate remained unchanged at 13.0% in September. That’s exactly double the national unemployment rate, which also managed to only rise by 0.1 points.
NBF notes the national unemployment rate climb was relatively small due to the participation rate, which dropped 0.2 points to 64.8% in September. The population added 23,700 people aged 15 and older, but the agency reported 52,900 fewer in the labour force.
Employer layoffs aren’t hitting as hard as media reports may suggest, but it’s harder to find a job. StatCan reported the layoff rate remained near its pre-pandemic average. At the same time, their data shows just 30.6% of those unemployed in August found a job in September. In contrast, the ratio was 32.8% a year ago, and averaged 36.5% pre-pandemic.
Both NBF and Oxford Economics warn this report shows a weaker-than-expected economy. Arseneau and Ducharme argue the Bank of Canada “needs to exercise patience before raising rates,” additionally pointing to subdued wage pressure. On the flip side, Oxford’s Stillo sees a 25 basis point rate hike in both October and December, citing fuel-driven inflation risks.
