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.
Youth job losses, only healthcare gains in the past year.
Basically, if you’re a young adult the only employment in Canada is taking care of its aging boomers? Wildly dark economy we’re living in here.
US economic policy south of the border has had a large effect on our integrated economy. US Employers added only 29,000 jobs in Sep 2026; unemployment rose to 4.2%
Yesterday morning, Thanksgiving Sunday in Canada, on Question Period, CTV News one-hour recap of events in the week, host Vassy Kapelos raised the dismal LFS jobs report for September, where instead of forecast job gains there was a loss of 68 thousand jobs. Looking at August and September combined, there was a loss of 110 thousand jobs, mostly full-time jobs in both months. (The private sector forecasts indicated there would be a gain of 10,000 jobs in September.) Most of these were also jobs belonging to young people, 15-24 years old. Vassy claimed, counterfactually, that the public service accounted for much of these losses. In fact, while the public sector lost jobs in September while the private sector didn’t, most of these public sector jobs were in education services; it wasn’t that Carney was ruthlessly eliminating bloat in the federal civil service. Vassy also made no mention of 13 thousand job losses in manufacturing, part of the hemorrhaging of manufacturing jobs, not to mention manufacturing firms, that continues in the fourth quarter. Vassy opined that just in the previous week she had seen Opposition Leader Pierre Poilievre denouncing Canada’s failing job market. Prime Minister Carney had replied that jobs were up, but Vassy said very delicately that “these numbers definitely contrast that [claim].” It would have been more accurate to say that they flatly contradicted it. Jobs were not only down for those two months but for 2026Q3 compared to 2026Q2. Next to opine was CTV News pollster Nick Nanos, who for some reason Vassy calls a data scientist. Nick clearly didn’t like a report that put his beloved Liberal government in a bad light, and sniffed that it was “a mugs game” to analyze the job e thonumbers coming out of StatCan. And La Presse journo Joël=Denis Bellavance, who fancies himself something of a Carney whisper, claimed that Carney would say it didn’t make sense to look at monthly movements rather than what happened over the year, as if that would save the day. In his world, real job losses, calling real pain are not going to imperil a party’s hold on office. Everything depends on what kind of ‘narrative’ a leader could tell about the economy, and, totally unsurprisingly, he was more impressed by Carney’s fabulist narrative than by Poilievre’s more realistic one. Sorry for this lengthy description of part of a panel discussion, but it does give an inkling of how the Liberal Party has stayed in power for almost 11 years now in spite of a substandard economic performance. We have one of the most thoroughly controlled political media of any democratic country.
A few interesting facts from the update: The unemployment rate actually did fall from 7.1% in September 2025 to 6.5% in September 2025, but this may not hold up when the LFS incorporated alrevised census estimates in its numbers. The alternative unemployment rates based on US concepts for comparability with American numbers showed a smaller decrease, from 5.7% to 5.4%. These are estimates unadjusted for seasonal variation.
The preliminary estimate of real wage changes for permanent employees showed a 0.7% decrease in September 2026, while real wages for all employees declined by 0.6%. Definitely not a sign that the economy is overheating, but it puts paid to Carney’s boast that affordability is the best it has been in more than a decade.