Canadian Labour Market Shows Unexpected Hiring Surge
The Canadian labour market showed an unexpected hiring surge in September, with the economy adding 60,000 jobs in the month. This topped economists’ expectations for a gain of 5,000 jobs in September and marks a rebound from losses of more than 100,000 positions over the previous two months.
Unemployment Rate Holds Steady
The unemployment rate held steady at 7.1 per cent in September, as the gains were concentrated in full-time work with 106,000 positions added in September, more than offsetting a drop in part-time work. RBC assistant chief economist Nathan Janzen said there were signs of "stabilization" in the September labour force survey, but cautioned against reading too much into one month of jobs data.
Signs of Stabilization
StatCan said the economy added a modest 22,000 net jobs between January and September, when threats of U.S. tariffs started to ratchet up trade uncertainty and put pressure on critical Canadian industries. Janzen said job growth hasn’t been enough to keep pace with the expansion of Canada’s labour force, even as population growth slowed to a virtual halt in the past two quarters.
Job Growth in Key Sectors
The trade-sensitive manufacturing industry saw its first job gains since January last month and led job growth among other sectors with 28,000 positions added. Before last month, manufacturing had seen a net loss of 58,000 jobs so far in 2025. The health care and social assistance sector and agriculture industry also contributed to job growth last month.
Regional Job Growth
Alberta led job growth among the provinces with 42,500 positions added, which BMO chief economist Doug Porter said was the province’s largest-ever job increase for a single month outside pandemic-era volatility. Average hourly wages were up 3.3 per cent year-over-year last month, a tick higher than the rate seen in August.
Challenges for Young Workers
The unemployment rate for youth aged 15 to 24 rose two tenths of a point to 14.7 per cent in September, a 15-year high, outside the pandemic years, as students returning to school continued to struggle finding work after a tough summer jobs market. The jobless rate among youth attending school was 17.1 per cent, up 3.1 percentage points from September 2024, StatCan said.
Impact on Interest Rates
The September jobs report marks the Bank of Canada’s last look at the labour market before its next interest rate decision on Oct. 29. The central bank cut its policy rate by a quarter point to 2.5 per cent last month as it said the balance of risks in the economy was shifting away from higher prices and toward weaker growth. TD Bank senior economist Andrew Hencic said the September jobs figures may well "change the calculus" for the Bank of Canada.
Economists’ Predictions!
Economists are mixed on whether the strength is enough to deter the Bank of Canada from cutting its policy rate again later this month. Porter said the soft summer labour market was a big factor fuelling the September rate cut, so "solid jobs figures lean toward a pause at the October meeting." Hencic and Porter both said September inflation will have to come in below expectations to warrant another cut in October.
Conclusion
In conclusion, the Canadian labour market showed an unexpected hiring surge in September, with the economy adding 60,000 jobs in the month. While economists are mixed on whether the strength is enough to deter the Bank of Canada from cutting its policy rate again later this month, the September jobs report marks the Bank of Canada’s last look at the labour market before its next interest rate decision on Oct. 29. The upcoming inflation report on Oct. 21 will have the final say on whether the Bank of Canada delivers back-to-back rate cuts.
