Canada loses 68,000 jobs in September, missing a forecast for a gain

Canada lost 68,000 jobs in September, Statistics Canada said Friday morning, and the unemployment rate rose to 6.5% from 6.4%.

Economists had expected employers to add 9,200 jobs and the unemployment rate to reach 6.5%. Only the rate matched.

It was the second monthly decline in a row. Employment fell by 42,000 in August, and the two months together took away 110,000 jobs.

The loss was public-sector jobs. Employment there fell by 70,000, more than the national decline, and it was the fourth monthly drop in a row.

Private employers added 24,100 jobs, and self-employment fell by 22,500. The private-sector gain was a little larger than the fall in self-employment.

Over the past year the public sector has lost 119,000 jobs, most of them in education, the agency said.

Educational services lost 35,000 jobs in September. Health care and social assistance lost 23,000, and manufacturing lost 13,000.

The participation rate, the share of people working or looking for work, fell to 64.8%.

Employment among people aged 15 to 24 fell by 48,000, most of the national loss. People who stop looking for work are not counted as unemployed. The number of young people working or looking fell by 50,000, so their unemployment rate was little changed at 13%.

The report pulls against a rate rise

This is the last jobs report before the Bank of Canada announces its interest-rate decision on Wednesday, October 28, at 9:45 a.m. Eastern time, alongside a new forecast.

The Bank has held its overnight rate, the main policy rate, at 2.25% since a cut in October 2025. On September 2, before these two declines were published, Governor Tiff Macklem said the labour market had been improving, with more hiring by the private sector.

The Bank also said the risk of higher inflation had increased, with the conflict in the Middle East keeping energy prices high, and that it was prepared to adjust policy as needed.

A weaker labour market argues against a rise. The energy-price risk argues for one.

Before Friday's report, markets were not expecting an October increase, though the chance of a 0.25 percentage point rise had been edging up. They were expecting a rise of that size in December.

After the 8:30 a.m. Eastern time release, the Canadian dollar fell 0.44%, to 69.99 US cents. One US dollar bought 1.4287 Canadian dollars.

Two-year government bond yields reversed early moves and fell 9.5 basis points, to 2.410%. A basis point is a hundredth of a percentage point. Those yields move with the path markets expect for the Bank's rate, so the fall means that path moved down, against a rise.

Friday weakened the labour-market case for a higher rate, and the weakness is the public sector, not private employers. The energy-price risk the Bank flagged in September is unchanged, which is why a rise on October 28 is still possible.