Canada sheds 68,300 jobs in September and the loonie hits an 18-month low

Employers in Canada cut 68,300 jobs in September, nudging the unemployment rate up 0.1 percentage point to 6.5 percent¹. It was the second consecutive monthly decline⁴, and the losses in August and September together total 110,000³.

The composition was narrow rather than broad. The September fall was concentrated in the public sector³, and the CBC reported the decline concentrated among youth aged 15 to 24². The Canadian dollar hit an 18-month low as the data clipped bets on a Bank of Canada interest rate increase this month⁶.

The figures are the Bank of Canada’s last look at the labour market before its next interest rate decision, set for 28 October⁵. Economists called the report quite disappointing⁸. The Globe and Mail described the labour market as having stumbled again⁴, and National Newswatch put the September result at a loss of 68,000 jobs with the unemployment rate at 6.5 percent⁵.

Why it matters to investors

The report removes the case for a near-term rate rise rather than building one. The Globe and Mail reported that the second consecutive decline reinforces forecasts that the Bank of Canada will hold⁴. The Financial Post reported economists saying the Bank will remain patient and keep interest rates on hold, with one adding that the release “does reinforce that there is some reason for patience”⁷. One economist quoted by BNN Bloomberg said the view all year had been that the next hike will come in 2027, not this year⁸.

That divergence is the trade. Canadian rate expectations are being marked down while bets elsewhere are not, and the currency took the strain immediately⁶. For anyone holding Canadian assets unhedged, the labour market is now the dominant input to the exchange rate. Note too that the loonie’s move came on the data itself rather than on any policy statement, which says the market had been positioned for a rise⁶.

What to watch

The decision on 28 October is the next hard date⁵. Before it, the question is whether the weakness stays concentrated in the public sector and in younger workers or spreads to private payrolls^2,3. The CBC also reported that Deloitte Canada cut its GDP growth forecast by 20 percent as tariffs grip the economy amid President Donald Trump’s trade war, which is the channel most likely to turn two months of job losses into a trend². The loonie’s 18-month low is the running score on how much of that the market has already taken⁶.