Canada loses 68,300 jobs in September as unemployment rises to 6.5%
Key Facts
The Canadian economy lost a net 68,300 jobs in September, according to Reuters, citing the labour market report released on October 9, marking a larger contraction than in the previous month. The result defied expectations among economists polled by the agency, who had forecast an increase of 9,200 jobs during the month. The unemployment rate rose to 6.5% as the number of people employed in the Canadian economy fell over the same period. The unemployment rate had stood at 6.4% in August, before the increase recorded in the September report. The latest contraction followed the loss of 41,700 jobs in August, according to Reuters, extending the decline in employment instead of returning to the growth anticipated in the poll.
Net job losses from the start of the year through September totalled 41,200, according to Reuters, as the monthly decline in employment continued. September's losses were concentrated in the public sector, according to the Statistics Canada report, which showed diverging employment trends between the public and private sectors. Across economic activities, losses were concentrated in education and health care, among the areas affected by weak employment during the month. Manufacturing also posted losses, but its contribution was smaller than that of the areas leading the decline, according to the official report. By contrast, the agency described private-sector employment as "little changed" in its assessment of that part of the labour market in September.
The labour force participation rate fell to 64.8% in September, according to figures cited by Reuters in its coverage of the Canadian labour market report. The monthly decline in the participation rate was 0.2 percentage points, alongside falling employment and a rising unemployment rate over the same period. On wages, average hourly earnings for permanent employees rose 2.3% year-on-year in September, according to the agency. Wage growth for this group of employees had stood at 2.0% year-on-year in August. Wage growth for permanent employees thus accelerated from the previous month, while employment recorded a larger decline than in August.
The Bank of Canada had held its target interest rate at 2.25% in its September decision, before the latest employment report was released in October. The decision to hold rates was issued on September 2, according to the Canadian central bank's published record of interest rate decisions. In the accompanying statement, the bank described demand for labour as still weak in its assessment of economic conditions. The bank said in the same statement that indicators pointed to continued excess supply in the Canadian economy at that stage. September's job decline followed this assessment of weak labour demand and continued excess supply, and came ahead of the next monetary policy decision.
Against the trade backdrop, the summary of deliberations for the Bank of Canada's September decision addressed new U.S. tariffs on Canadian goods exported to the United States. The summary said the new tariffs covered about 5% of Canadian goods exports to the U.S. market, according to the central bank. Governor Tiff Macklem also addressed trade uncertainty in a speech in September, linking it to difficulties facing companies' investment and hiring decisions. The speech summary said that "trade uncertainty makes it harder for businesses to invest and hire new workers," warning of the impact of uncertainty on business activity. The summary added that these difficulties could slow growth in the near term, according to the governor's assessment in the speech.
In markets, the Canadian dollar fell after the jobs report was released on October 9, according to Reuters, as the decline in employment defied expectations. The reaction extended to the Canadian government debt market, where the yield on two-year government bonds fell during the session in which the report was released. The yield dropped 9.5 basis points, according to figures cited by the agency from trading after the labour market data were announced. The yield stood at 2.410% after the decline, alongside weakness in the Canadian currency following the report. The Bank of Canada will issue its next interest rate decision on October 28, alongside the publication of its Monetary Policy Report, according to the bank's official schedule.