some context on canada’s big jobs gain in september

Results from the September Labour Force Survey (LFS) exceeded expectations with the country adding 66,400 jobs last month, a reversal from the 106,300 cumulative job losses registered in July and August. Of note, the gain in September was driven entirely by increases in full-time positions (+106,100), with part-time employment declining by 45,600. Prior to September, all employment additions through the first eight months of 2025 had come in the form of part-time jobs, and full-time employment was actually down marginally. The unemployment rate held firm at 7.1% and the participation rate rose 0.1 percentage points, to 65.2%.

Although the September data was a welcome reprieve from several months of deteriorating conditions, LFS data is notoriously volatile, and one positive print is not necessarily indicative of a turning point. Canada’s labour market remains notably softer than where it started the year. For instance, while the country has added almost 98,000 net jobs through 2025, that is in the context of a labour force that has expanded by 199,000 workers. The remaining increase reflects a rise in unemployment, which has grown by 101,000 so far this year, reaching 1.6 million in September. Meanwhile, the unemployment rate, which is up 0.5 percentage points year-to-date, remains at its highest level since May 2016 when excluding the pandemic years of 2020 and 2021. And both the participation rate (the proportion of people aged 15-plus who are working or looking for work) and the employment rate (the proportion of people aged 15-plus who are employed) are lower now than at the beginning of the year. Specifically, the participation rate has fallen 0.2 percentage points, to 65.2%, and the employment rate is down 0.4 percentage points, to 60.6%.

Looking ahead to the Bank of Canada’s next interest rate decision on October 29th, the latest LFS data on its own won’t convince the Bank to hold its policy rate (currently at 2.50%) or cut further. Attention will shift to the next inflation release on October 21st for signs of progress on measures of core inflation, which remain elevated around 3%. Barring any significant developments in October, the Bank may instead opt to maintain its current policy and await the results of the federal government’s next budget and the upcoming immigration levels plan. Both are expected in early November, and both will have implications for inflation and the economy.