Canada's economy shed about 68,000 jobs in September, Statistics Canada reported, following another decline in August. The unemployment rate rose to 6.5% from 6.4%, and the surprise result lands less than two weeks before the Bank of Canada's October 28 rate decision, which economists now expect to be a close call.

What did the September jobs report show?

The drop was far larger than expected. Economists polled by Reuters had forecast a gain of 9,200 positions, according to Canada News Media. A falling participation rate limited the rise in unemployment, because fewer people were working or looking for work, so the headline rate does not capture every sign of weakness.

The losses were spread across sectors rather than concentrated in one export industry:

  • Educational services and health care posted substantial declines
  • Manufacturing also shed jobs

How did markets react to the Canada job losses?

Traders trimmed their bets on a rate increase. Markets priced roughly a 25% chance of a quarter-point hike on October 28 after the report, down from about 40% beforehand, according to LSEG Data and Analytics figures cited by Wealth Professional. TD Economics put October odds near 27% and December near 88%.

Economists were divided on what the numbers mean. BMO chief economist Douglas Porter said a second month of sizable losses "washes away the surprising strength" seen earlier in the year and favored watchful waiting. RBC's Claire Fan called monthly employment counts "notoriously volatile" and expected unemployment to edge lower through the end of 2026. CIBC's Andrew Grantham attributed the softness mainly to data volatility rather than new U.S. tariffs.

What is pulling the Bank of Canada the other way?

The policy rate has sat at 2.25% since a cut in October 2025. Headline inflation is running above the 2% target on gasoline prices tied to the war in Iran, while core measures sit near 2%. Statistics Canada releases September inflation data on October 19, and the Bank publishes its quarterly business and consumer expectation surveys the same day.

RBC assistant chief economist Nathan Janzen said the October 28 meeting is "live," with a hike possible but not his base case. Desjardins's Royce Mendes said rates will likely hold this month but higher energy prices could force tightening soon. A re-escalating trade dispute with the United States has also weighed on growth prospects.

FAQ

What is the Bank of Canada's next rate decision date?

The central bank announces its decision on October 28, with September inflation data due October 19.

What is the current policy rate?

The rate stands at 2.25%, unchanged since a quarter-point cut in October 2025.