Employment Growth Defies Forecasts
Canada’s labour market delivered an unexpected boost in September, adding 60,400 jobs, according to Statistics Canada. The unemployment rate held steady at 7.1%, defying economists’ forecasts for a 2,500 job loss and a modest uptick in the jobless rate to 7.2%, based on Bank of Montreal consensus estimates.
While the headline numbers surprised on the upside, several economists cautioned against drawing strong conclusions from a single report, pointing to the Labour Force Survey’s volatility in recent months.
“The wild swings in headline job tallies in the past four months serve as a loud reminder to not be heavily swayed by one or two reports,” said BMO Chief Economist Douglas Porter, who described the results as “a welcome bounce but hardly a trend.”
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Mixed Signals Beneath the Headline
CIBC economist Andrew Grantham highlighted that September’s gain must be viewed in context: significant job losses in July and August have dragged the three-month average to a loss of 15,000 jobs per month, while the six-month average shows only a modest 9,000 job gain.
Grantham noted that the data still points to substantial slack in the labour market, supporting the case for another Bank of Canada rate cut, though the strong employment figure may delay the timing if upcoming inflation data also surprises to the upside.
TD economist Andrew Hencic added that “the bar will be even higher for inflation to underperform,” noting that market expectations for a near-term rate cut deteriorated after the jobs report. CPI data will be released on October 19.
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Labour Market Still Under Pressure
Despite the September gain, employment has grown by only 22,000 positions (0.1%) since the start of the year, while the employment rate remains 0.5 percentage points below its early 2025 peak. The participation rate rose slightly to 65.2%, indicating more Canadians were looking for work, while the unemployment rate is 0.5 points higher than in January.
Several economists emphasized that the persistent 7.1% unemployment rate is a better reflection of underlying weakness than the volatile headline employment figure. “Despite the sharp rise in employment reported, the unemployment rate didn’t budge,” noted Desjardins’ Royce Mendes.
Sector and Demographic Breakdown
Full-time employment surged by 106,000 (+0.6%), offsetting a 46,000 (-1.2%) decline in part-time jobs. Public-sector hiring led the way, contributing 31,000 jobs (+0.7%), while the private sector added 22,000 and self-employment increased by 7,900.
Core-aged workers (25–54 years) accounted for most of the gains, with women adding 77,000 jobs and men 33,000. Employment among those aged 55 and older fell by 44,000 (-1.0%). Youth employment was flat, but the youth unemployment rate rose to 14.7%, its highest level since September 2010 outside the pandemic period.
Economists Urge Caution
According to Indeed Canada senior economist Brendon Bernard, the weak job figures from July and August “contained as much noise as signal.” He said the overall trend remains one of a gradually deteriorating labour market, which is “relatively good news for those in stable jobs” but underscores tough conditions for job seekers.
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