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Labour Market Surprises in October

Canadian Economics

By: Maxime Arseneau

    

  • Employment rose by 67,000 in October (0.3 per cent). The labour force participation rate edged up to 65.3 per cent, while the unemployment rate declined to 6.9 per cent. On a year-over-year basis, average hourly wages increased by 3.5 per cent.
  • Employment in goods-producing industries was largely unchanged, as gains in manufacturing (+8,700) and utilities (+7,600) offset jobs decreases in construction (-14,800).
  • Job gains for there month were led by services (+67,600), driven by growth in wholesale and retail trade (+40,700) and transportation and warehousing (+29,500) and information and culture (+25,200).
  • Some sectors experienced small declines, notably healthcare (-7,200) and education (-7,000).
  • Provincially, Ontario led job gains (+54,500) followed by Quebec (+11,500), Alberta (+10,300) and Newfoundland and Labrador (+4,400). Employment levels in the other provinces were largely unchanged from September.
  • While the overall job gains is positive, gains were skewed in part-time jobs (+85,000), while full-time jobs declined (-18,000).

Key insights

Canada added 127,000 jobs over September and October, a positive sign as Canada’s economy continues to navigate the trade war. Employment now stands 88,500 higher than in January—an increase of 0.4 per cent—while the unemployment rate has risen by 0.3 percentage points to 6.9 per cent.

Most of the recent gains have been concentrated in industries that have managed to thrive despite tariffs, including finance, wholesale trade and retail. In contrast, employment in manufacturing and construction remains below January levels. Although conditions appear to be gradually improving, ongoing tariffs continue to pose a risk to job growth in these sectors, particularly if tariffs remain in place. Overall, modest job gains are expected through the remainder of the year, but the worst of the labour market downturn likely lies behind us.

Canada’s labour market also contending with slower population growth. The country’s population has increased by only 157,000 during the first nine months of 2025, compared with nearly 800,000 over the same period last year. According to federal migration targets, this slowdown is expected to intensify in 2026 and 2027 as the government moves to reduce the number of non-permanent residents in the country. In its latest budget, Ottawa announced plans to cut international student admissions by half over the next two years to help meet this goal. This policy shift will have medium-term repercussions for the labour market, limiting Canada’s ability to attract and retain talent in the years ahead.

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