Canada lost 68,000 jobs in September, according to Statistics Canada, marking a second straight month of losses.
The unemployment rate ticked up by 0.1 percentage points to 6.5 per cent, which is where it stood at the start of 2026.
The figures bucked economists' predictions for a gain of 9,200 positions in September. It comes after another surprise last month of 42,000 job losses for August, which snapped a hot streak for the labour market.
Before the two monthly declines, Statistics Canada data showed employment trending upward, with 181,000 jobs added between April and July. Employment is still up compared to a year ago by 95,000 positions.
BMO chief economist Doug Porter said job figures are often volatile, and have been especially so in recent years. Still, he noted it's rare to see two months in a row of job losses of this size.
"There's no question, this is a disappointing result," Porter said. "It does suggest the economy was struggling in the early fall."
By sector, educational services, health care and social assistance, and manufacturing led the declines. More workers in "other services," which includes things like repair and maintenance, offset the losses.
Porter says the drop in education jobs, which was concentrated in Quebec, could be a bit of a blip, but says it could also point to weakness in the sector with fewer international students studying in the country.
CIBC senior economist Andrew Grantham adds that while some data volatility is likely behind the poor report, losses in manufacturing could be a sign that new tariffs, which came into effect in August, are taking a toll.
Statistics Canada says job losses were split between full- and part-time work and were concentrated in the public sector, which dropped 70,000 roles in the month. The number of public sector employees is down by 119,000 compared to the same time last year.
The private sector added some jobs and held steady however — a silver lining, according to Porter.
The decline was concentrated in youth aged 15 to 24, who accounted for 48,000 job losses, according to the data agency. But the pool of young workers also shrank in September, leaving the unemployment rate for that group relatively unchanged at 13 per cent.
Core-aged women, between 25 and 54 years old, also held 28,000 fewer positions, and the number of women in that age group looking for work increased.
Quebec led the job losses by province, with 49,000 jobs lost in the month, while B.C. followed with 20,000 fewer jobs. Alberta, on the other hand, added 23,000 positions.
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The jobs data is the Bank of Canada's last look at the labour market before its next interest rate decision on Oct. 28.
CIBC senior economist Andrew Grantham says despite volatility playing a factor, the drop in the number of jobs will likely keep the Bank of Canada from making any interest rate moves in the near future.
"Overall, while the weakness in today's employment data is likely more a reflection of data volatility than the impact of new U.S. tariffs, it does support our call that the Bank of Canada will remain patient and keep interest rates on hold at the two remaining meetings this year," Grantham wrote in a note to investors.
