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Economic News

Canada: Back-to-Back Job Losses Push 2026 Hiring into the Red

October 9, 2026
Nom du rédacteur
Kari Norman
Senior Economist

Highlights

  • Canadian employment plunged by 68.3k in September.
  • The unemployment rate rose 0.1 percentage point to 6.5% in the month.
  • Total hours worked dropped sharply at 1.5% month over month in September but were up a slim 0.1% year over year. Average hourly wages rose 2.3% y/y. Table 1 summarizes key labour market indicators.
  • The September employment data left our Q3 real GDP growth tracking at about 2.0% annualized, modestly above the Bank of Canada’s latest Monetary Policy Report External link. forecast.

Comments

Canadian employment fell by 68k in September, following a decline of nearly 42k in August. Taken together, these back-to-back drops pushed Canada’s 2026 job creation into the red. Job losses were split between full-time (-35.4k) and part-time employment (-32.9k) in September. Losses were concentrated in the public sector (-70.0k), with about half occurring in education (-35.3k), possibly reflecting the impact of fewer international students as the school year began. Healthcare External link. also gave back some of its gains from earlier in the year (-23.1k). The brunt of the employment decline was felt in Quebec (-49.4k), and to a lesser extent in BC (-20.2k) and Ontario (-20.0k) (graph 1). Meanwhile, Alberta added another 23.1k jobs last month, cementing its position as Canada’s job creation engine this year.

Average wage growth picked up to 2.3% y/y in September from 2.0% in August. However, recent hourly wage gains in both the goods- and services-producing sectors have slipped below the rise in the cost of living (graph 2).

Despite the sharp drop in employment, the unemployment rate increased by a relatively modest 0.1 percentage point (ppt) to 6.5%. This was partly due to a 0.2 ppts decline in the participation rate to 64.8%. The unemployment rate for core-aged workers ticked up 0.1 ppts to 5.6%. Among youth ages 20–24, the unemployment rate fell 0.2 ppts to 9.9%, while among teens ages 15–19, it climbed 0.7 ppts to 19.3%. Youth unemployment has remained elevated despite Canada’s youth population falling by nearly 70k since last September.  Long-term unemployment also remains elevated, while both temporary and permanent layoffs increased in September (graph 3).

Implications

The September LFS gives the Bank of Canada even less reason to come off the sidelines, particularly with trade tensions with the US continuing to weigh on the growth outlook. At the same time, sustained high energy prices amid the ongoing conflict in the Middle East, alongside retaliatory tariffs, are adding to inflationary pressures. If those pressures persist, they could bring forward the timing of the Bank’s next rate hike from our current call for Q1 2027.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.