Canada lost 68,000 jobs in September, its second straight monthly drop, Statistics Canada reported Friday, as government-linked work kept shrinking and young workers took the biggest hit. The unemployment rate rose to 6.5% from 6.4% in August.

The losses split almost evenly between full-time jobs, down 35,000, and part-time jobs, down 33,000. Combined with August’s loss of 42,000, the past two months have wiped out more than half of the 181,000 jobs Canada added from April through July. Economists had expected a small gain of about 7,000 jobs.

The public sector shrank for a fourth straight month. Education lost 35,000 jobs and health care and social assistance lost 23,000, two areas heavily tied to government payrolls. Manufacturing shed 13,000 jobs. Private-sector employment was flat for a second month, though it remains up 163,000 from a year earlier.

Young Canadians absorbed most of the damage. Workers aged 15 to 24 lost 48,000 jobs, a 1.8% drop, which means roughly 7 out of every 10 jobs lost in September belonged to someone under 25. Employment among women aged 25 to 54 fell by 28,000.

Fewer Canadians are even looking for work. The share of people 15 and older who are working or job hunting fell to 64.8%, the lowest since December 1997 outside the pandemic year of 2020. Statistics Canada tied much of that drop to an aging population: people 65 and older now make up 23.2% of the working-age population, close to 1 in 4, up from 20.5% in 2019.

There is still a cushion. Even after two down months, Canada has 95,000 more people working than it did a year earlier, a gain of 0.5%.

The reason this matters on the U.S. side of the border is trade. Canada is one of America’s biggest customers, and a Canadian worker who loses a paycheck buys fewer American-made cars, appliances and farm goods, and takes fewer trips south. U.S. tariffs are already showing up in Canada’s job numbers. In Statistics Canada’s August release, companies that depend on U.S. demand for their exports had an average layoff rate of 0.9% over the prior 12 months, compared with 0.7% at other companies. Put simply, firms selling into the U.S. were laying off workers at a rate about one-third higher than everyone else.

That cuts both ways for American businesses. U.S. factories that buy Canadian parts and materials depend on those supply chains staying healthy, and U.S. exporters depend on Canadian households having money to spend.

The slowdown on the Canadian side lines up with a cooling job market at home. The U.S. economy added just 29,000 jobs in September, far below the roughly 90,000 economists expected, and the U.S. unemployment rate rose to 4.2% from 4.1%. Government payrolls fell by 17,000. In both countries, public-sector hiring is pulling back and private employers are adding few new positions.

Pay is barely moving for workers in either country. U.S. average hourly earnings rose 3.0% over the past year, while in Canada, wage growth for permanent employees slowed to 2% year over year in August, the weakest reading in more than seven years outside the pandemic.

The main tool for a response sits with the Bank of Canada. The central bank has held its benchmark rate at 2.25% for seven straight meetings, and its next decision comes October 28. Two weak jobs reports in a row give it more reason to stay steady or consider relief for borrowers, while tariff-driven price pressures pull the other way. A cheaper Canadian dollar and lower borrowing costs would help Canadian companies hold onto workers and keep buying from U.S. suppliers.

Washington is moving in the opposite direction on rates. The Federal Reserve raised its benchmark rate in September to fight inflation tied to high energy prices, which widens the gap between the two countries’ borrowing costs.

The next Canadian jobs report, covering October, is due November 6, the same day the U.S. releases its own October numbers. That pairing will show whether the cooling on both sides of the border is deepening or leveling off.

JBizNews Desk | Ottawa

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