Canada Unemployment Rate Unexpectedly Drops

The unemployment rate in Canada inched up to 6.5% in September 2026 from a two-year low of 6.4% in the previous month, in line with market expectations. The jobless rate remained below its two-year average, when the Canadian economy slowed under the Bank of Canada's aggressive rate-hiking cycle and elevated inflation. The number of unemployed people rose by 15,400 to 1.475 million during the period, even as the labor force participation rate fell by 0.2 percentage points to 64.8%, its lowest level since 1997 when excluding the initial shock of the COVID-19 pandemic. The unemployment rate rose by 0.3 pp to 5.3% for core-aged women, offsetting the 0.2 pp reduction to 5.8% in that for men. The rise in the headline rate coincided with an unexpected 68,300 drop in net employment, contrasting with expectations of a slight increase.

The unemployment rate in Canada was unchanged from the previous month at 6.4% in August of 2026, aligned with market expectations. The number of unemployed people rose by 4.8 thousand from the previous month to 1.455 million in the period. In the meantime, net employment sank by 41.7 thousand to 12.173 million, contrasting sharply with expectations of a 15 thousand increase. A large portion of the drop in net employment was owed to a 36.8 thousand drop in the labor force, equivalent to a 0.1 percentage point decline in the participation rate to 65%, thus preventing a drop in the unemployment rate. The unemployment rate rose by 0.2 percentage points to 6%, while unemployment for core-aged women fell 0.2 percentage points to 5%. The youth unemployment rate rose 0.3 percentage points to 12.9%.

The unemployment rate in Canada fell to 6.4% in July of 2026 from 6.5% in the previous month, under market expectations that it would remain unchanged, to mark the lowest jobless rate in two years. Net employment rose by 75,100, well above market expectations of a 15,000 increase, to mark a third straight rise in jobs. Meanwhile unemployment fell by 14,500 to 1,455,000. The unemployment rate fell to a record low of 5.2% for core-aged women, firmly below that for core-aged men (5.8%). Meanwhile, the youth unemployment rate fell to 12.6% from 12.7% in the previous month. The rise in net jobs and drop in unemployment corresponded to a 0.1 percentage point increase in the labor force participation rate to 65.1%, the highest so far this year.