Canada Loses 68,000 Jobs in September and Unemployment Rises to 6.5%, Complicating the Bank of Canada's October 28 Decision

Canada's labour market weakened sharply in September, giving the Bank of Canada a harder decision at its October 28 meeting. Statistics Canada's Labour Force Survey, released on October 9, 2026, showed the economy shed about 68,000 jobs, after a loss of about 42,000 in August, and the unemployment rate rose to 6.5% from 6.4%. The figures are described here as reported by Advisor.ca and Babypips, which differ slightly in places, for example on the exact August loss, and where they differ the article says so. The next jobs report is due on November 6.

Start with the size of the surprise. Economists polled before the release expected the economy to add about 9,000 jobs, according to both reports, so the actual result was roughly 77,000 below the forecast. Advisor.ca describes it as the steepest monthly job loss since February. The losses were split nearly evenly between full-time and part-time work, with Babypips reporting a fall of 35,400 full-time and 32,900 part-time jobs. The unemployment rate rose by 0.1 percentage points to 6.5%, back to its level in January, which is in line with forecasts. Babypips notes that the rate was held down because fewer people were searching for work, as the participation rate fell to 64.8% from 65.0%, the lowest reading in 29 years outside the pandemic period. The article points to an ageing population and slower immigration as reasons.

Where were the jobs lost? According to Advisor.ca, the losses were concentrated in the public sector, which has now declined for four straight months, while the private sector was stable, which economists found reassuring. Educational services led the industry losses with about 35,000 fewer jobs, followed by health care and manufacturing. Babypips reports that education, health care and social assistance together lost 58,400 jobs and manufacturing lost 12,700, and that Statistics Canada linked part of the fall in education to fewer international students. Young workers were hard hit: those aged 15 to 24 lost 48,000 jobs, and women aged 25 to 54 also saw employment fall. Repair, maintenance and household and personal services gained 17,000.

The provincial picture varied. Quebec lost 49,000 jobs, Ontario 20,000 and British Columbia 20,000, while Alberta added 23,000, according to Advisor.ca. Wages rose, with Babypips reporting that average hourly pay for permanent employees was up 2.3% from a year earlier, compared with 2.0% in August. That is below the rate of inflation, which means real wages are falling. On a longer view, Babypips says Canada has lost a net 41,200 jobs so far in 2026, compared with a gain of 211,300 over the same period last year, while Advisor.ca says employment is up 95,000 from a year ago and that employers added 181,000 jobs from April to July. These two statements are not necessarily inconsistent, since they cover different periods, but they show how the monthly weakness follows a stronger spring and summer.

Economists' reactions were pointed but not uniform. Robert Kavcic of BMO called it a very bad jobs print but noted that smoothed six-month trends still show modest, steady gains. Daniel Hyun of KPMG said it would be premature to blame tariffs, since most losses came from sectors that do not face trade directly. Andrew Hencic of TD said he expects the Bank of Canada to hold this month, with two weak labour reports undermining arguments for a rate rise. Babypips adds that economists see the effect of United States tariffs on employment data as limited.

The central bank's dilemma is the key point. The Bank of Canada held its overnight rate at 2.25% on September 2, and the next decision is scheduled for Wednesday, October 28 at 9:45 a.m. Eastern. Its September statement said consumer price inflation had been about 3% in recent months, mainly because of gasoline prices, and that upside risks to inflation had increased because of the conflict in the Middle East and tariffs. August inflation was 3.0%, according to Babypips, well above the 2% target. Against that, weak hiring argues for patience. According to Advisor.ca, LSEG data put the probability of a quarter-point hike in October at about 25%, down from about 40% before the jobs data. KPMG still expects a rise to 2.5% by year-end, but Hyun said the soft data adds doubt to a December move, while Babypips says traders now price a possible 25 basis point hike in December. September inflation data, due on October 19 according to Babypips, will be the next important input.

The currency also reacted. Advisor.ca reports the Canadian dollar fell to its lowest level against the US dollar since early 2025, briefly dipping below 70 US cents, and Babypips reports a fall of 0.44% to 1.4287 per US dollar and a drop of 9.5 basis points in the two-year yield to 2.410% after the release. A weaker currency makes imports more expensive, which can add to inflation, a further complication for policymakers.

What does it mean for households? For mortgage holders, the immediate effect is uncertainty. Renewing borrowers face a rate environment in which a hike is possible but less likely than before the data, and our earlier coverage of mortgage renewals notes that many borrowers are already renewing at higher payments. For workers, especially young people and those in education and public services, the data signal tougher hiring. For savers, any rate rise would lift deposit rates, while a hold keeps them where they are. For lenders and insurers, rising unemployment is an early indicator of credit stress and can lead to more missed payments, although the data do not yet show that.

Readers should keep two cautions in mind. Monthly survey estimates are volatile and subject to sampling error, and economists such as BMO's note the underlying trend is better than one month. And the sources here are secondary reports of the Statistics Canada release, so exact figures should be confirmed on the agency's website. The coming CPI release and the October 28 decision will show which concern wins out.