September Job Loss Sparks Surge in Unemployment to 6.5%
Canada’s economy stunned widespread expectations to post a massive job loss in September and the unemployment rate edged up, data showed on Friday, effectively wiping out all the jobs gains seen this year.
The economy lost a net of 68,300 jobs in September after a loss of 41,700 positions in August, Statistics Canada said. It said the unemployment level inched up to 6.5 per cent.
While September was the first full month of employment reported after a new set of U.S. tariffs hit Canada, the job losses were not significantly higher in U.S.-facing industries. On the contrary, the biggest drop came from public-sector employees, data showed.
Analysts polled by Reuters had forecast jobs gains of 9,200 and predicted the unemployment rate would be 6.5 per cent, up from 6.4 per cent in August.
With the September report, Canada has effectively lost a net 41,200 jobs this year, against a solid gain of 211,300 seen for the same period a year ago.
The losses were almost equally divided between full-time and part-time workers and were led by educational services and health care and social assistance. Those sectors form a substantial chunk of public-sector employees and together lost 58,400 jobs.
A smaller number of international students coming into Canada was one of the reasons for decline in jobs in education services, Statscan said.
The manufacturing sector, a part of which is exposed to the U.S., saw a net decline of 12,700 jobs.
Economists have said that the new U.S. tariffs impact only a small section of the jobs that are dependent on the U.S. and are not likely to have a major impact on the employment data in the coming months.
The September employment report is also the last set of jobs data before the Bank of Canada’s monetary policy decision at the end of this month.
Money markets are pricing in no hike in October but the bets for a 25-basis-point hike were slowly creeping up before the jobs data was released. Markets expect a 25-basis-point hike in December.
The labour force participation rate, or the share of the population that is either employed or looking for work, fell 0.2 percentage points to 64.8 per cent in September, its lowest level in 29 years barring the pandemic era.
This was primarily due to an aging of population who are dropping off the work force, and not being replaced due to slower immigration.
Employment among youth aged between 15 and 24 declined in September and dropped by 48,000, following a smaller decline in August. Immigration control is also part of the reason for this decline.
The labour force continued to shrink in September, data showed.
The growth rate of permanent employees’ average hourly wages, a gauge of inflation, rose to 2.3 per cent year-over-year in September after dropping to 2 per cent in August, Statscan said.
This article was first reported by The Globe and Mail
