Canada’s unemployment rate was unchanged in September and remains the highest it’s been in four years, as the trade war and tariffs continue to present economic challenges and hinder business growth.
Statistics Canada reported Friday that September showed an unemployment rate of 7.1 per cent, while 60,000 jobs were added and the national employment rate increased 0.1 per cent to 60.6 per cent.
“September’s numbers basically reversed August’s decline. So if we look on net over the longer period, things are basically flat since May in terms of the number of people working in Canada,” says economist Brendon Bernard at Indeed.
“That’s not a sign of a strong job market.”
Although the unchanged unemployment rate in Canada compared to the previous month, in addition to the thousands of jobs added, may seem like good news in the near-term, some view this as a sign of “volatility.”
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This means it may be too early to start celebrating, and the Bank of Canada may not be ready to let its guard down just yet.
“Canada’s labour markets showed signs of stabilization in September, with a jump in employment (particularly in full-time jobs) although with some mixed details under the surface,” said Nathan Janzen, assistant chief economist at the Royal Bank of Canada.
“The Canadian employment counts are notoriously volatile, but the September job gain is a welcome reprieve after outsized declines over July and August were worrying enough to push the Bank of Canada to cut interest rates in September.”
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Friday’s jobs report from Statistics Canada highlighted how some areas in the labour market saw growth in hiring while others saw declines, which suggests although the overall numbers seem positive, specific sectors and demographics are struggling more than others.
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Canada’s manufacturing sector made up nearly half of the jobs added in September, with an increase of 28,000, and marked the first increase for the sector since January, but the long-term picture is still a concern.
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“Manufacturing saw a bit of a pop in (Friday’s) job numbers, but it’s down from the start of the year, and given the volatility of the numbers, we can’t hang our hat too much on that,” says Bernard.
“It highlights that on net things can kind of hold up, at least in the near term. There are major negotiations happening that will have like really important ramifications for jobs and just the long-term trajectory of the Canadian manufacturing sector.”
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Manufacturing is one of the main sectors that are vulnerable to tariffs amid the trade war because of the higher costs for goods and services that can weaken demand for key items like materials, energy products, vehicles and parts.
Prime Minister Mark Carney met with United States President Donald Trump earlier this week and discussed tariffs as Canada and the U.S. continue to hammer out the details of a long-term trade deal between the two nations.
Statistics Canada says jobs gains were also strong in September for the health care and social assistance sectors along with that of agriculture.
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Meanwhile, the retail and wholesale sector saw one of the biggest drops in September with 21,000 jobs lost
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Younger Canadians also continued to struggle with looking for work — especially after a very difficult summer job market.
The unemployment rate for those aged 15 to 24 increased to 14.7 per cent in September, which is up 1.2 per cent from a year prior, and was mainly seen for students.
Specifically for youth attending school, the unemployment rate was 17.1 per cent, up 3.1 per cent from September of last year.
“Over the past few years, if we split just the population between 15 to 24-year-olds and those over 25, both have seen increases in unemployment. But proportionally, the increase has been much sharper on youth end — that (trend) didn’t change in today’s numbers,” says Bernard.
“There’s ample competition among job seekers for both students and newcomers to Canada, especially in areas like retail, where there’s relatively few roles. It’s tough to land that job for some folks, especially students, which results in this higher rate of unemployment.“
Last month, the Bank of Canada delivered its first cut to borrowing rates since March, and cited weakness in the labour market as one of the main factors that led to its decision.
Lowering interest rates can, in theory, help boost job hiring because businesses are able to borrow money more easily to fund expansion plans and pay those new employees.
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Further cuts may be needed in the near term, with the next monetary policy announcement scheduled for Oct. 29. Most economists still expect them to cut again at that meeting — even after seeing Friday’s somewhat positive report from Statistics Canada.
“It is highly unlikely that Bank of Canada policymakers thought in September that just one cut in the overnight rate would be enough to address economic weakness, and the labour force data today (Friday) probably isn’t positive enough alone to derail another cut in October,” says Janzen.
“Future cuts beyond October would be less likely if government deficit spending ramps up as expected to help address tariff related economic weakness.”
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