What’s going on with Canada’s job losses?

RBC senior economist Claire Fan says Canada’s September job losses were concentrated among younger workers and should not be overread.

In an Oct. 9 employment report, Fan noted that Canada lost 68,000 jobs in September, adding to a 42,000-job decline in August.

The September decline reversed most of the job growth recorded over the summer and left year-to-date employment down 41,000.

The losses were concentrated in public-sector-linked industries, including education and health care. Education services lost 35,000 jobs, while health care and social assistance lost 23,000.

But the ecomomist argued that monthly employment counts are volatile, and there are reasons not to read too much into the weak result too quickly.

In September, 70% of the decline, or 48,000 jobs, was among Canadians aged 15 to 24. Fan said that group typically faces seasonal headwinds at this time of year after the school year starts.

The unemployment rate rose to 6.5% from 6.4%, but remained below the 6.9% 2026 high reached in April and the 7.1% level recorded a year earlier.

Fan said the unemployment rate is a more stable gauge of labour market conditions than monthly employment counts.

Manufacturing employment was largely steady despite new U.S. tariffs.

Job openings data from Indeed.com suggest hiring demand has not weakened to a problematic extent since U.S. tariffs were imposed on a limited scope of Canadian exports.

She expects earlier labour-market progress to be largely sustained, with the unemployment rate broadly edging lower through the end of 2026.

Regionally, the job losses were concentrated in Quebec, which lost 49,000 positions, including 37,500 in educational services. Quebec employment is now down about 130,000 year-to-date, and its unemployment rate rose 0.4 percentage points to 6.0%.

British Columbia and Ontario each lost 20,000 jobs, while their unemployment rates were little changed at 6.4% and 7.0%, respectively.

Alberta added 23,000 jobs, bringing employment up 76,000 year-over-year, while its unemployment rate fell to 6.4% from 6.8%.

Fan said labour force participation continued to decline, reaching 64.8%, its lowest level since May 1997 outside the pandemic years. Population aging, rising retirements and weaker immigration are reducing labour supply relative to the total population.

Total hours worked fell 1.5% in September after four straight months of stronger increases, though hours worked were still up 3.2% on a quarter-over-quarter annualized basis in Q3.

Wages rose 2.3% year-over-year. Fan said she continues to expect wage growth to moderate as slack persists in the labour market.

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