Canada’s Job Market Shows Resilience, But Headwinds Remain
Canadian employment surprised to the upside in September, posting a net gain of 60,400 jobs, according to the latest Labour Force Survey. However, the unemployment rate held steady at 7.1% as more people entered the workforce.
This marks a welcome rebound after two consecutive months of job losses — though not quite enough to fully offset the summer’s decline.
Where the Jobs Came From
The September increase was driven primarily by full-time work, with strong growth in manufacturing, agriculture, health care, and other services.
- Manufacturing: +27,800 jobs — the sector’s first increase since January.
- Biggest gains in Ontario (+12,000) and Alberta (+7,900).
- Employment rate: up 0.1 points to 60.6%.
- Average hourly wage: up 3.3% year-over-year to $36.78.
This rebound reflects resilience despite ongoing U.S. tariff pressures, and some exporters are benefiting from exemptions under the Canada–United States–Mexico Agreement.
Market Reaction: Loonie Jumps, Rate Cut Odds Drop
The Canadian dollar strengthened immediately after the jobs data, as shorter-term interest rates climbed. Markets dialed back expectations for a Bank of Canada rate cut on October 29, with odds falling from 70% to around 25%.
But while the report beat forecasts, it didn’t fully erase earlier job losses — Canada still shed a net 45,900 jobs in Q3, the weakest quarter since the pandemic.
Economic Headwinds Still Loom
- Total hours worked: ↓ 0.2% in September.
- Labour force: ↑ 72,300 people.
- Youth unemployment: remains elevated at 17.1% for students and 11.9% for non-students.
- Manufacturing: despite September’s gain, the sector is still down 58,000 jobs since January.
Trade tensions with the U.S. continue to pose a major risk, with the trade agreement up for renegotiation by July 2026.
Regional Highlights
- Quebec: Unemployment at 5.7% — improved from June’s 6.3%. Job market stable, but aluminum and lumber industries could face losses if tariffs persist.
- Ontario: Unemployment rose 0.2 points to 7.9% as more people entered the job market.
- Toronto CMA: Unemployment unchanged at 8.9%, up 0.8 points year-over-year.
Bottom Line: A Stronger Report, But Not a Turning Point (Yet)
This jobs report offers a glimmer of strength in Canada’s economy — but underlying details suggest caution. Hours worked fell, permanent layoffs ticked up, and unemployment is still 0.5% higher than a year ago.
The Bank of Canada has made it clear: upcoming inflation data (October 21) will be a key factor in its October 29 rate decision.
- A strong CPI print could delay further rate cuts.
- Persistent weakness, however, would support another reduction.
- Fiscal stimulus may also play a role if tariff-related pressures worsen.
In short: Canada’s labour market isn’t in freefall, but it’s not out of the woods either. For homeowners, buyers, and investors, interest rate expectations will continue to shape the housing and lending landscape this fall.
✅ Key Dates to Watch:
- Oct. 21: CPI release + Business & Consumer Outlook Survey
- Oct. 29: Next Bank of Canada rate decision
- Dec. 10: Final BoC decision of 2025