Canada's job market has taken a significant hit over the past two months, erasing much of the gains made earlier in the year. According to Statistics Canada's September Labour Force Survey, seasonally adjusted employment dropped by 0.3%, equating to a loss of 68,300 jobs. This follows an earlier decline of 41,700 jobs in August, bringing the total job losses to 110,000 in just two months. The sharp decline has rolled back roughly 61% of the jobs added between April and July, leaving annual employment growth at just 0.5% higher than last year.
The job losses were primarily felt in the public sector, which lost 70,000 jobs in September alone. This marks the fourth consecutive month of decline for the public sector, which has shrunk by 2.6% over the past year. Self-employed workers also saw a significant reduction, with 22,500 jobs lost, while the private sector gained a relatively insignificant 24,100 jobs. The education sector, despite recent enrollment growth, shed 35,000 jobs, and healthcare and social assistance saw a loss of 23,000 jobs, the first decline in this sector since December 2022.
Young adults bore the brunt of the job losses, accounting for 70% of the net decline in September. Despite this, the youth unemployment rate remained unchanged at 13.0%, double the national unemployment rate, which only rose by 0.1 points. The participation rate dropped by 0.2 points to 64.8%, indicating that fewer people are actively seeking employment. The layoff rate remained near its pre-pandemic average, but the job market has become more challenging, with only 30.6% of those unemployed in August finding a job in September.
Analysts from National Bank Financial and Oxford Economics have differing views on the economic outlook. National Bank Financial's Matthieu Arseneau and Alexandra Ducharme suggest the Bank of Canada should exercise patience before raising rates, citing subdued wage pressure. In contrast, Oxford Economics' Tony Stillo predicts a 25 basis point rate hike in both October and December, pointing to fuel-driven inflation risks.