Key points

• Canadian employment declined again in September.   
• Today’s jobs report reinforces our view that the Canadian economy slowed significantly in the third quarter amid escalating trade tensions. 
• Alberta diverges with a solid performance in September, bouncing back from cooler summer and leading all provinces in year-to-date job gains so far this year.
  
  

National labour market weakens

Canada’s labor market softened again in September, with employment dropping by 68K (-0.3%)—marking the second consecutive monthly decline.

While employment remained above year-ago levels, the margin was thin, with jobs up 95K jobs (+0.5%) compared to September 2025.

September's decline spanned both full-time and part-time roles. Losses in the public sector more than offset a minor increase in private-sector employment.

Digging deeper into the industry details, the decline was concentrated in educational services and health care & social assistance, which together accounted for over 85% of the net job losses.

Manufacturing employment—which had shown resilience over the summer—retreated by 13K, falling 0.7% below last year's level. This contraction follows the implementation of new 50% tariffs on select U.S. exports effective late August.

With fewer jobs, the unemployment rate ticked up for the first time in five months to 6.5% in September. That’s an improvement over the same time last year (7.1%) and close to levels observed before trade disruptions began in early 2025. However, this is entirely due to slower growth in the population and labour force, as opposed to job growth.

Taken together with July's stagnant GDP reading, the latest job readings point to an economic slowdown in Q3. This is in line with our expectations given the escalating trade tensions and renewed cost of living pressures.

Alberta jobs rebound sharply

After a mild summer cooldown, employment reversed course with a sharp 23K increase in September - the strongest monthly gain since November 2025. The increase was entirely led by the services sector while the goods-producing sectors remained subdued.

The construction sector has made some advances this year but employment in the oil and gas extraction category* continued to pull back. This is surprising to us, given the pick-up in rig activity in recent months that have followed higher oil prices. We continue to watch this closely, and see this as an upside to future employment growth - especially if new energy infrastructure projects proceed.

Looking back to the start of the year, employment had a strong first half - maintaining momentum amid national job declines. Then employment slipped over the summer, before bouncing back in September. All told, employment was 2.9% higher in September than the same time last year - the third highest year-over-year increase among provinces (after P.E.I. and Nova Scotia) and outpacing the national pace of 0.5%.

*Referring to the overall mining, quarrying, oil and gas extraction industry, which primarily consists of oil and gas extraction workers in Alberta

Another way to look at the results is on a year-to-date basis. Over the first three quarters of the year, employment was up 3.5% in Alberta compared to the same period last year. This was the strongest among provinces and in contrast to the national rate of 0.6%. With the healthy gain in September, Alberta has accounted for the majority (73%) of national employment gains over the first three quarters of 2026.

Alberta’s rebalancing act

Over the last three years, Alberta has far outpaced the country in job growth. Yet, it has consistently had a higher unemployment rate than the national average. Why? A faster growing population has led to more job seekers.

In September, the unemployment rate in Alberta fell to 6.4%—the lowest rate since February and below the national average for the first time in six months.

In short, the labour market is rebalancing, as jobs are now keeping pace with population growth and entry into the labour force. 

There was a glimmer of hope last month in the job market for youth, which has faced challenges over the last few years. Alberta’s youth unemployment rate dropped from 15.3% to 12.5% last month partly due to a slowdown in active job seekers. That’s still elevated, but it represents the lowest since October 2023. More time is needed to see if this becomes a trend.