Canada Unexpectedly Lost 68,000 Jobs: Youth Hardest Hit
The Canadian labor market unexpectedly reversed course. In September, employment decreased by as many as 68,000 people, although economists had expected the creation of about 9,000 new jobs.
This is already the second bad month in a row: in August, the number of employed fell by another 42,000. Over just two months, Canada has lost roughly 110,000 working people.
But the most notable detail of the new report is who exactly came under pressure. Almost three-quarters of the September decline came from young people aged 15 to 24.
After the data release, the Canadian dollar fell to an 18-month low, and investors sharply reduced the likelihood of another interest rate increase by the Bank of Canada.
Instead of Expected Growth – Minus 68 Thousand
According to Statistics Canada, employment in September fell by 68,000 people, or 0.3%.
Unemployment rose from 6.4% to 6.5%.
The decline affected different forms of employment almost equally: the number of full-time workers fell by approximately 35,000, and part-time by 33,000.
The report was especially surprising against the backdrop of forecasts. Economists surveyed before the statistics release had on average expected employment growth of about 9,200 people.
The difference between expectations and reality was more than 77,000 jobs.
The Main Blow Fell on Youth
Among Canadians aged 15 to 24, employment declined by 48,000 in September alone.
This is the second consecutive month of decline. Over August and September, the number of employed young people fell by about 67,000, effectively erasing the growth observed in spring and early summer.
For those looking for a first job, part-time work during studies, or trying to gain a foothold in the market after graduating from college or university, this means tougher competition for vacancies.
At the same time, the youth unemployment rate in September remained high—about 13%.
Where Jobs Disappeared
The decline was particularly noticeable in several major sectors.
In education, the number of employed fell by approximately 35,000, in health care and social assistance by 23,000, and in manufacturing by another 13,000.
The public sector stands out, with employment shrinking by about 70,000. This is already the fourth consecutive month of decline.
However, the picture across the country is uneven.
In Quebec, employment decreased by about 49,000, in British Columbia by 20,000. At the same time, Alberta added around 23,000 jobs.
So it is not yet a uniform collapse of the entire labor market. But two consecutive months of decline have become a serious enough signal to change the expectations of economists and investors.
Finding a New Job Is Also Becoming Harder
Another important figure hides behind the overall unemployment rate.
Among those who were unemployed in August, about 30.6% were able to find work in September. A year earlier this indicator was 32.8%, and before the pandemic it was even higher.
So the problem is not only falling employment: people who have already lost their jobs or are looking for a new position need more time to become employed again.
At the same time, the share of the population working or actively looking for work fell to 64.8%—the lowest level since 1997, excluding the pandemic year of 2020.
This is partly due to the aging population, but the figure adds another sign that the labor market is becoming less active.
Why the Canadian Dollar Fell Following Jobs
At first glance, job losses and the currency exchange rate are two different stories. In the financial market, they are connected through interest rates.
Before the statistics release, investors discussed the possibility that the Bank of Canada might raise the key rate again to fight inflation.
But raising the cost of credit becomes significantly more difficult when the labor market starts to weaken: more expensive borrowing can further slow business, consumer spending, and hiring.
After the report, the probability of a rate increase at the October 28 meeting, as priced by the market, fell from about 40% to 25%.
Against this background, the Canadian dollar weakened to 1.4298 per U.S. dollar—the lowest level since April 2025.
What This Means for Ordinary Canadians
The consequences of a weak labor market are mixed.
For a person currently looking for work, this is a bad signal: new opportunities are becoming fewer, and competition is growing. This is already particularly noticeable among youth.
For workers, a deterioration in the labor market can also mean weaker positions in negotiations over salary increases or changing employers.
But for people with mortgages and other loans, there is another side: if the economy continues to cool, the Bank of Canada will find it harder to raise interest rates.
This does not mean automatic cheaper credit. The central bank simultaneously monitors inflation, and it is the combination of prices, employment, and economic growth that will determine further decisions.
Two Months Changed the Picture of the Canadian Labor Market
As recently as summer, the situation looked considerably more stable. From April to July, employment in Canada grew by about 181,000 people.
August and September took away about 110,000 of that gain.
However, compared to September of last year, the number of employed is still higher by about 95,000, so it is too early to talk about a total labor market collapse.
But the new statistics show a notable turn: instead of the expected continuation of growth, the country got two consecutive months of employment decline, with young workers most affected.
And it is this combination—unexpected job losses, a difficult start for youth, and a revision of interest-rate expectations—that is now becoming one of the main issues for the Canadian economy this autumn.
Based on materials from: Statistics Canada, Reuters.