Canada Unemployment Rate expected to edge higher in September
- The Canadian Unemployment Rate is seen edging higher in September.
- Extra cooling of the labour market could reinforce additional rate cuts.
- The Canadian Dollar remains sidelined below the 1.4000 barrier so far.
Statistics Canada will release its Labour Force Survey on Friday, and markets are bracing for a mixed print. The Unemployment Rate is expected to tick higher to 7.2% in September, while the Employment Change is forecast to rise by 5K new workers after a huge loss in August.
A weaker report could strengthen the case for the Bank of Canada (BoC) to continue its easing cycle after cutting its policy rate by 25 basis points to 2.50% at its September 17 gathering, following three consecutive pauses.
At the event, Governor Tiff Macklem struck a cautious tone at his usual press conference. He said the inflation picture hasn’t changed much since January, noting mixed signals and a more data-dependent stance as the bank takes decisions “one meeting at a time.” He also acknowledged that inflationary pressures look a little more contained but reiterated that policymakers remain ready to act if risks tilt higher.
In addition, Senior Deputy Governor Carolyn Rogers added that no change in the deposit rate is being contemplated, while Macklem said the BoC is “a long way from even contemplating QE.” The Governor also pushed back against recession fears, forecasting around 1% growth in H2 2025. Overall, the tone suggested a steady hand, with no rush to adjust policy as the bank awaits clearer inflation trends.
The August prints from the domestic labour market saw the Unemployment Rate tick higher to 7.1%, while the Employment Change dropped for the second consecutive month, this time by 65.5K individuals.
What can we expect from the next Canadian Unemployment Rate print?
Consensus among market participants projects a slight rise in Canada’s Unemployment Rate to 7.2% last month, up from August’s 7.1%. Additionally, investors forecast the economy will add a modest 5K jobs in September, enough to reverse the last couple of months of declining job creation. It is worth recalling that Average Hourly Wages, a proxy for wage inflation, rose at an annualised 3.6% in August, up from the previous 3.5%.
According to analysts at TD Securities: “We look for employment to rise by 5K in September for a muted rebound after two months of heavy layoffs. Service sector hiring should drive the headline print alongside a mixed performance for goods-producing industries.”
When is the Canada Unemployment Rate released, and how could it affect USD/CAD?
The Canadian Unemployment Rate for September, accompanied by the Labour Force Survey, will be released on Friday at 12:30 GMT.
Markets see around a 70% chance of another quarter-point rate cut by the BoC at its October 29 meeting, while implied rates forecast nearly 25 basis points of easing by year-end. A soft print from the job market should add to the likelihood of lower rates later in the month, which in turn could weigh on the performance of the Canadian Dollar (CAD).
Senior Analyst Pablo Piovano from FXStreet notes that the Canadian Dollar has moved into a consolidative theme since late September, always below the key 1.4000 hurdle, while gains remain capped by the critical 200-day SMA near 1.3980.
Piovano indicates that the resurgence of a bullish tone could motivate USD/CAD to challenge the October ceiling at 1.3986 (October 2), prior to the May top at 1.4015 (May 13). A sustainable upward bias from here should retarget the April high at 1.4414 (April 1).
On the other hand, Piovano suggests that provisional contention emerges at the 55-day and 100-day SMAs at 1.3822 and 1.3761, respectively. The loss of this region could spark a potential move toward the September base at 1.3726 (September 17). A deeper retracement could prompt a test of the July valley at 1.3556 (July 3) to re-emerge on the horizon.
“Furthermore, momentum indicators lean bullish: the Relative Strength Index (RSI) hovers past 62, while the Average Directional Index (ADX) is near 24, indicating a firm trend,” he says.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
Economic Indicator
Net Change in Employment
The Net Change in Employment released by Statistics Canada is a measure of the change in the number of people in employment in Canada. Generally speaking, a rise in this indicator has positive implications for consumer spending and indicates economic growth. Therefore, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.
Read more.Last release: Fri Sep 05, 2025 12:30
Frequency: Monthly
Actual: -65.5K
Consensus: 7.5K
Previous: -40.8K
Source: Statistics Canada
Canada’s labor market statistics tend to have a significant impact on the Canadian dollar, with the Employment Change figure carrying most of the weight. There is a significant correlation between the amount of people working and consumption, which impacts inflation and the Bank of Canada’s rate decisions, in turn moving the C$. Actual figures beating consensus tend to be CAD bullish, with currency markets usually reacting steadily and consistently in response to the publication.
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