Construction work in Toronto. The September employment data follows significant job losses in July and August. (Richard Lautens/Toronto Star via Getty Images) · Richard Lautens via Getty Images
Canada’s job market defied expectations in September, adding 60,400 positions even as the unemployment rate held steady at 7.1 per cent, Statistics Canada reported Friday. Economists had anticipated a modest loss of roughly 2,500 jobs and the unemployment rate to rise to 7.2 per cent, according to consensus estimates from the Bank of Montreal.
Economists acknowledged the forecast-beating surprise, but several noted the Labour Force Survey’s frequent volatility and cautioned that the September data did not amount to convincing evidence of a turnaround.
“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,” BMO chief economist Douglas Porter said in a note following the data release. Porter deemed the results “a welcome bounce but hardly a trend.”
In a note published following the data release, CIBC economist Andrew Grantham notes that the September employment gain “needs to be viewed in the context of what preceded it,” with significant job losses in July and August dragging the three-month average to a loss of 15,000 per month and the six-month average a slight gain of 9,000.
“Overall, today’s data still suggests that a large degree of slack remains within the labour market, which we think justifies a further interest rate cut from the Bank of Canada, although today’s strength in employment could delay the timing of that move, particularly if the upcoming [Consumer Price Index] print is also stronger than expected,” Grantham writes.
TD economist Andrew Hencic said the “bar will be even higher for inflation to underperform,” noting that market pricing for a rate cut “materially deteriorated this morning.” Statistics Canada will release CPI data on October 21.
Since the start of the year, employment has risen by only 22,000 positions, or 0.1 per cent, and the national employment rate of 60.6 per cent remains half a point below its recent peak in the opening months of 2025. The participation rate edged up to 65.2 per cent, suggesting more Canadians were looking for work, while the unemployment rate remains 0.5 percentage points higher than in January.
Even with the September gain, several economists, including Desjardins’ Royce Mendes, noted that the persistently high jobless rate is a clearer reflection of ongoing economic weakness than the volatile headline employment figure. “Despite the sharp rise in employment reported, the unemployment rate didn’t budge,” he writes.
The September data also show that the grim job figures from July and August “contained as much noise as signal,” Indeed Canada senior economist Brendon Bernard said in a statement. Rather than an outright collapse, he wrote, the employment trend appears “more consistent with the gradually deteriorating labour market of the past few years.” This, Bernard argued, is “relatively good news for those employed in stable jobs,” but also underlines the challenging job market faced by those looking for work.
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Full-time work surged by 106,000 (+0.6%), while part-time work dropped by 46,000 (-1.2%). Public-sector employment accounted for roughly half of September’s increase, up 31,000 (+0.7 per cent), while gains in private-sector hiring (+22,000) and self-employment (+7,900) were less pronounced.
Most of the gains were among core-aged workers (those 25–54 years old), with job gains among both women (+77,000) and men (+33,000). Employment among those aged 55 and older fell by 44,000 (-1.0 per cent). Youth employment, which has been a particular concern, was flat, but that cohort’s unemployment rate climbed to 14.7 per cent, the highest since September 2010 outside the pandemic.
“Employers have become cautious after years of economic uncertainty, and may be prioritizing senior hires or short-term contracts over investing in early-career talent,” said Nora Jenkins Townson, the founder of human resources consultancy Bright + Early. “That leaves a generation caught between high living costs and limited growth opportunities.”
In a note published last week, CIBC had forecast an above-consensus job gain of 25,000 due to the end of a weak summer job season. “Students who never got summer jobs this year can’t lose them in September, so that will show up as a seasonally-adjusted ‘rise’ in youth employment,” chief economist Avery Shenfeld wrote.
By industry, manufacturing saw 28,000 jobs added, a gain of 1.5 per cent and the first increase since January, with notable increases in Ontario (+12,000) and Alberta (+7,900). Health care and social assistance (+14,000) and agriculture (+13,000) also contributed to overall growth, while wholesale and retail trade (-21,000) continued to weaken.
Regionally, Alberta led the country with a gain of 43,000 jobs (up 1.7 per cent), more than offsetting summer losses, and its unemployment rate fell to 7.8 per cent. Employment also increased in New Brunswick and Manitoba, while Ontario and Quebec were largely unchanged. Ontario’s jobless rate rose to 7.9 per cent, up 0.8 percentage points from a year earlier.
Average hourly wages grew 3.3 per cent year-over-year to $36.78, roughly matching August’s pace.
Correction: The next Consumer Price Index from Statistics Canada will be released on October 21
John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf.
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