Canada’s job market continued to show signs of weakness in October, with employment declining for the third consecutive month and unemployment reaching 6.7%.
The latest figures from Statistics Canada suggest that businesses are becoming more cautious about hiring as economic uncertainty continues.
📉 Canada’s Job Market Continues to Slow
Canada lost 4,700 jobs in October 2026, pushing the national unemployment rate up from 6.5% in September to 6.7% in October.
The results were weaker than economists had anticipated. Before the report was released, economists surveyed by Reuters had predicted that Canada would add approximately 13,600 jobs, with unemployment remaining unchanged.
Instead, October marked the third straight month of employment declines.
After losing more than 100,000 jobs combined in August and September, the latest figures suggest that Canada’s labour market is struggling to regain momentum.
CIBC senior economist Andrew Grantham noted that while monthly employment data can fluctuate, three consecutive months of job losses point to a concerning trend.
🏢 Private Sector Jobs Decline While Public Sector Hiring Rebounds
One of the biggest developments in October was the difference between private and public sector employment.
- Private sector: Lost approximately 53,000 jobs, its first monthly decline since February.
- Public sector: Added approximately 50,000 jobs, ending four consecutive months of declines.
Despite October’s drop, private sector employment remains higher than a year ago, while public sector employment is lower on a year-over-year basis.
The figures suggest that private businesses may be becoming more hesitant to expand their workforces amid ongoing economic challenges.
👩💼 Young Canadians Face a Tougher Job Market
Younger workers were among those most affected by October’s employment conditions.
The unemployment rate for Canadians aged 15 to 24 increased by 0.7 percentage points to 13.7%.
Statistics Canada also reported that students experienced higher unemployment than young people who were not attending school.
Meanwhile, unemployment among Canadians aged 25 to 54 remained relatively stable.
These figures highlight the growing challenges younger Canadians face when searching for employment, particularly those entering the workforce or looking for part-time opportunities.
🏗️ Which Industries Lost the Most Jobs?
Employment changes varied across industries, with some sectors experiencing significant declines.
Industries that lost jobs:
- 🛍️ Wholesale and retail trade: Down 29,000 jobs
- 🚚 Transportation and warehousing: Employment declined
- 🍽️ Accommodation and food services: Employment declined
Industries that gained jobs:
- 🏗️ Construction
- 📚 Educational services
Wholesale and retail trade experienced the largest employment decline in October, continuing a downward trend that has developed over the past year.
Despite the overall weakness, the proportion of workers laid off between September and October remained nearly unchanged from a year earlier at 0.7%.
📍 Alberta Sees Major Job Losses While B.C. Recovers
Employment trends also differed significantly across provinces.
Alberta: The province lost approximately 24,000 jobs in October, reversing a similar-sized gain in September. Its unemployment rate climbed to 7.3%.
British Columbia: The province added approximately 12,000 jobs, recovering some of the employment losses recorded the previous month.
These regional differences show that economic conditions and hiring activity are not affecting every part of Canada equally.
💰 Wage Growth Continues to Ease
Average hourly wages increased by 2.2% compared with October 2025, slightly below September’s annual growth rate of 2.3%.
Slower wage growth can be another sign of reduced pressure in the labour market.
Although wages are still increasing, the slower pace suggests that employers may be facing less competition when hiring workers.
🏦 What Does This Mean for the Bank of Canada?
October’s employment report comes shortly after the Bank of Canada raised its benchmark interest rate by 0.25 percentage points to 2.50% on October 28, 2026.
It was the central bank’s first interest rate increase in more than three years.
The decision was largely driven by concerns about persistent inflation, particularly rising energy costs and the possibility that higher prices could spread throughout the economy.
However, the latest employment figures introduce another challenge.
The Bank of Canada must now balance two competing concerns:
- 🔺 Inflation: Higher interest rates can help reduce inflation by slowing spending and borrowing.
- 🔻 Employment: Higher borrowing costs can also weaken economic activity and make businesses more reluctant to hire.
With Canada’s labour market showing signs of slowing, policymakers may have additional reasons to be cautious about further interest rate increases.
Trade Uncertainty May Be Affecting Hiring Decisions
Ongoing uncertainty surrounding Canada-U.S. trade negotiations may also be contributing to weaker employment.
According to Tu Nguyen, an economist at RSM Canada, disruptions in trade discussions have made businesses and investors more cautious.
When companies are uncertain about future trade conditions, costs, and demand, they may delay hiring or expansion plans.
Nguyen believes unemployment could continue rising toward the end of 2026.
However, federal government measures designed to encourage business investment, including incentives announced in the latest federal budget, could help support job creation in 2027.
📅 Could the Bank of Canada Hold Interest Rates in December?
With employment declining for three consecutive months, attention is now turning to the Bank of Canada’s next interest rate announcement in December.
Although inflation remains a major concern, continued weakness in the labour market could encourage the central bank to keep its policy rate unchanged rather than introduce another increase.
Economists such as Nguyen believe the latest employment figures strengthen the case for a pause.
However, the decision will ultimately depend on upcoming inflation reports, economic growth, and other employment indicators.
Do we recommend locking in your variable rate mortgage at this time?
☐ Yes
✅ No
☐ Maybe
With Canadian bond yields trending downward over the past few weeks, we believe it may be worth waiting before locking into a fixed mortgage rate.
Lower bond yields could lead lenders to reduce their fixed mortgage rates in the coming weeks, potentially giving homeowners access to more competitive options.
While future rate decreases aren’t guaranteed, locking in now could mean missing out on a better fixed rate if lenders adjust their pricing.
Our recommendation: Stay variable for now and monitor fixed mortgage rates before making a decision. If rates decrease, it may be a better opportunity to consider locking in.
🏡 What Does This Mean for Canadian Homeowners and Buyers?
For Canadians with mortgages or those planning to purchase a home, the latest employment report is another important economic development to watch.
A weaker job market could reduce pressure on the Bank of Canada to continue raising interest rates. However, that does not guarantee lower mortgage rates.
Variable mortgage rates are influenced by changes to lenders’ prime rates, while fixed mortgage rates are more closely connected to bond yields.
The bottom line: Canada’s economy is showing signs of slowing, but inflation remains a concern. Whether you’re buying a home, renewing your mortgage, or considering refinancing, staying informed about economic developments can help you make more confident financial decisions.
Source: Statistics Canada, Bank of Canada, and CBC News – Canadian Economy Loses 4,700 Jobs as Unemployment Rises to 6.7%