Canada’s labour market took a hit in September, losing 68,300 jobs, the largest monthly drop this year, according to Statistics Canada (StatsCan), which added the unemployment rate edged up to 6.5%, the same rate at the beginning of 2026. Of the four largest provinces, Alberta was the only province with jobs gained, adding 23,000 positions, while BC and Ontario each lost 20,000 jobs, and Quebec saw the largest drop of 49,000 jobs. Canada has now lost a net 41,200 positions in 2026, compared with net gains of 211,300 over the same period in 2025. These overall figures add to the calculations of inflation and energy costs the Bank of Canada will use to determine the course of action it will take on its overnight rate on Oct. 28, and more specific numbers in the StatsCan report, such as demographics, will also likely have a bearing. In a statement, RBC Economics said, “The monthly employment counts are notoriously volatile, and there are reasons not to read too much into the softer reading too quickly.” “In September, 70%, or 48,000, of the decline in employment was among those aged 15 to 24, a group that typically sees seasonal headwinds around this time of year after the school year starts.”.“The unemployment rate, as a more stable and reliable gauge of labour market conditions, ticked up slightly from 6.4% to 6.5% but remained 0.6 percentage points below a year ago.” Andrew Hencic, director and senior economist at TD Economics, was clear on his observations of the numbers in the StatsCan report. “Ultimately, this report is going to pour some more cold water on near-term rate hike expectations for the Bank of Canada,” said Hencic. “Markets are currently pricing 27% odds of a hike in October, and 88% for December, the latter down from being fully priced yesterday,” he added. “We maintain the view that inflationary pressures are still relatively contained with average wage growth running at 2.4% and economic growth likely to slow further in Q4 as new tariffs weigh on activity. Given this backdrop we expect the bank to remain data-dependent and stay on hold in October.” Other predictions from UBS, Manulife, Oxford Economics and Scotiabank are the bank will increase its rate on Oct. 28. In a note, Derek Holt, vice-president at Scotiabank Economics, said the bank, “should fade (the StatsCan report) and remain focused upon its inflation mandate.” He noted the core consumer price index month-over-month, seasonally adjusted annual rate (SAAR), has been hovering around 3% for four months..”All measures of inflation are about on or above their 2% target in year-over-year or month-over-month SAAR terms,” he wrote. “Inflation expectations are sure to rise when we get the BoC’s surveys in two weeks. The output gap is closing fairly rapidly this year. Fiscal policy and commodity effects are likely to propel growth sharply forward.” Holt said concerns about inflation are legitimate. “Let’s see what Governor Macklem says next week,” added Holt. “Macklem is a notorious dove and so he may seize upon these numbers as cause for patience, but if he leans more heavily toward inflation concerns as we believe he should then today’s dovish market reaction may be vulnerable.”
