Canada’s September job losses deepen labour-market caution amid tariff uncertainty

Canada’s labour market contracted by 68,000 positions in September, split between 35,000 full-time jobs and 33,000 part-time jobs, according to Statistics Canada’s latest Labour Force Survey as reported by the Financial Post. The unemployment rate rose to 6.5 per cent, marking a second consecutive monthly decline in overall employment after job gains from April through July. [1]

The losses were concentrated in several service-producing and industrial sectors. Educational services shed 35,000 jobs, or 2.2 per cent from August; health care and social assistance lost 23,000 positions; and manufacturing employment declined by 13,000. Agriculture, professional services, and accommodation and food services recorded employment increases during the month, underscoring that the deterioration was not uniform across the economy. [1]

For trade-exposed businesses, the manufacturing decline is a warning signal rather than conclusive evidence of a sustained tariff-led downturn. RBC Economics assistant chief economist Nathan Janzen said the sector’s weakness indicates that U.S. tariffs are weighing on industry, while also cautioning that employment data can be volatile and that two months of declines are insufficient to establish a broader downward trend. The report notes that U.S. tariffs had been imposed on Canadian steel and aluminum exports and that additional duties followed the late-August breakdown in trade talks. [1]

Hours worked fell 1.5 per cent month over month in September, an additional sign that third-quarter economic momentum may have moderated. CIBC Capital Markets said the employment weakness was more likely to reflect data volatility than the immediate effect of new tariffs, but it expected softness in tariff-affected sectors could push unemployment somewhat higher in the near term. Its forecast called for real GDP growth to slow after the third-quarter rebound. [1]

The release also becomes the final labour-market reading before the Bank of Canada’s October 28 rate decision. Both cited economists said the data reinforced a case for policy patience, although their comments stopped short of treating September’s results as proof of economy-wide deterioration. For Canadian firms, the near-term implication is heightened uncertainty around labour demand, particularly where export exposure and tariff costs are already constraining production decisions. [1]