Crippling Job Losses in September Halt Discussions of an Interest Rate Hike.

October 9, 2026, Toronto, Ontario – Statistics Canada announced today that the economy lost 68,000 jobs in September, up from 42,000 in August. Economists had initially expected a gain of 9,200 jobs.

According to StatCan, job losses were nearly evenly split between full-time and part-time positions and were mostly in the public sector. This decline pushed the unemployment rate up a tenth of a percentage point to 6.5%, returning to the January level. September now marks the steepest single-month job losses since February.

Robert Kavcic, senior economist at BMO Capital Markets, stated, “There’s no way to sugarcoat it. It’s a very bad jobs report for September, following a disappointing report in August.”

He noted, however, that some positive news emerged: employers had expanded their payrolls substantially earlier in the year, adding about 181,000 jobs from April to July. Additionally, employment is up 95,000 positions from last September.

Kavcic said that smoothing out the often-volatile job figures over the past six months shows modest but steady gains. He acknowledged that while “it’s not a good sign going into the fourth quarter (with bad numbers), if you step back and ignore some of the month-to-month noise, it does look like the job market is holding up relatively well.”

Despite four consecutive months of declines in public sector employment, private-sector stability reassured economists.

The educational services sector saw the biggest decline, losing 35,000 jobs last month, followed by healthcare and manufacturing. Conversely, September saw a 17,000-job gain in sectors including repair, maintenance, and other household and personal services.

Young workers aged 15 to 24 were particularly affected by last month’s losses, with 48,000 fewer jobs. Women aged 25 to 54 also saw employment decline.

Provincially, Quebec was notably affected, losing 49,000 jobs last month, while Ontario and British Columbia each lost 20,000 positions. In contrast, Alberta added 23,000 jobs.

What’s the link between these numbers and the interest rate? 

As is its wont, the Bank of Canada will consider the September figures before its next interest rate decision, scheduled for October 28. The central bank’s policy rate has been at 2.25% for nearly a year, which most economists see as somewhat stimulating.

TD Bank’s senior economist Andrew Hencic indicated that two months of weak labor market reports between Bank of Canada decisions would dampen calls for interest rate hikes. 

Thus, all signs point to the Bank of Canada keeping rates unchanged this month, as new tariffs are likely to slow economic activity and help control inflation. 

*****