Canada Economy Sheds 68,300 Jobs in September, Erasing 2026 Gains

Canada's economy shed a net 68,300 jobs in September, completely erasing employment gains for the year and surprising forecasters who expected modest expansion, according to an Investing.com report. The sharp contraction pushed the national unemployment rate up to 6.5% from 6.4% in August.

“Given the recent deterioration in the labour market, Canadian central bankers will likely need to keep rates unchanged later this month,” Royce Mendes, head of macro strategy at Desjardins, said in a note reported by CP24.

Forecast Miss and Sector Losses

The September contraction defied expectations across financial markets. Economists polled by Reuters had forecast a net gain of 9,200 jobs alongside an unemployment rate of 6.5%.

The downturn was concentrated primarily in service industries. Educational services, healthcare, and social assistance together lost 58,400 jobs, a decline driven in part by lower international student numbers.

Wage Growth and Monetary Policy Implications

Despite the sudden drop in overall employment, wage pressures showed signs of accelerating. Average hourly wages for permanent employees rose 2.3% year over year in September, picking up pace from a 2.0% increase in August.

The unexpected combination of contracting employment and firmer wage growth complicates the policy outlook for the Bank of Canada. Analysts are weighing whether the sharp drop in payrolls signals broader economic cooling that warrants further monetary easing, or if persistent wage acceleration requires a cautious pause at upcoming central bank meetings.