Canada's employment fell by 68,300 last month, more than erasing previous job gains this year as the trade war with the US drags on. The unemployment rate rose to 6.5% in September from 6.4% in August, Statistics Canada reported. The job loss was driven by a 70,000 decline in public sector employment, with educational services down 35,300 and healthcare and social assistance down 23,100. Manufacturing also lost 12,700 jobs.
Bonds rallied after the data, with the two-year Canadian government bond yield falling eight basis points to 3.169%. The Canadian dollar weakened 0.5% to C$1.4293 per US dollar, its weakest since April 2025. Economists had expected a modest 10,000 job gain and unemployment to rise to 6.5%.
Since December 2025, employment has fallen by 41,000, and by 110,000 over the past two months. The September data reflects the initial impact of 50% US tariffs on $20 billion of Canadian goods, effective Aug. 22, with retaliatory tariffs starting Sept. 8. The Bank of Canada remains focused on inflation risks amid rising energy prices from the Iran war, with Governor Tiff Macklem warning of delayed rate hikes. The participation rate dropped to 64.8%, its lowest since December 1997 (excluding 2020), due largely to population aging. Meanwhile, employment rose in other services by 17,000, and average hourly wages increased 2.3% year-over-year.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing