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Employment Rebounds in September, but Broader Labour Trends Remain Flat

Canadian Economics

By: Maxime Arseneau

    

Employment rose by 60,000 in September (0.3 per cent). The labour force participation rate edged up to 65.2 per cent, while the unemployment rate held steady at 7.1 per cent. On a year-over-year basis, average hourly wages increased by 3.3 per cent.

  • Employment in goods-producing industries rose by 42,000, led by gains in manufacturing (+27,800) and agriculture (+13,200).
  • The services sector also posted a smaller increase (+18,400), driven by growth in health care (+21,500) and other services (+12,100).
  • Some sectors experienced declines, notably wholesale and retail trade (-20,800) and transportation (-7,400), which offset part of the gains in the services-producing industries.
  • Provincially, Alberta (+42,500) was the main driver of job growth in September, followed by Ontario (+8,800) and British Columbia (+7,800). New Brunswick (+4,700), Manitoba (+3,900), and Nova Scotia (+1,300) also posted gains, while other provinces saw modest declines.

Insights

Canada’s labour market has largely been halted since the start of the year, but September’s figures suggest it is still showing resilience. The rebound in manufacturing is particularly encouraging, as the industry has recovered nearly half of the jobs it had lost in 2025. Moreover, layoffs this year remain comparable to last year’s levels and are well below those seen during the 2008 financial crisis. However, further potential tariffs on pharmaceutical products or medium- and heavy-duty trucks could add another challenge for the labour market. As a whole, employment growth is likely to be volatile through the remainder of 2025.

While sluggish economic conditions will continue to shape labour market trends this year, declining migration will further complicate matters. Canada’s population growth has slowed sharply in 2025 following new immigration policies. The population increased by fewer than 160,000 people in the first nine months of the year, compared to almost 800,000 over the same period in 2024. With labour supply growth slowing, employers will increasingly need to draw from the pool of unemployed workers to fill job vacancies, bringing the unemployment rate down next year despite modest job gains.

Further ahead, a tighter labour market will continue to weigh on job growth. As economic conditions gradually improve heading into 2027 and labour demand picks up, some sectors will struggle to find qualified workers. This will leave the labour market in an unbalanced position where unemployment falls, but employment growth remains constrained.

For a broader perspective on Canada’s economic trajectory, see our Canada’s Five-year Outlooks report.

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