Canada's week was defined by a single, ugly number: the economy lost 68,300 jobs in September, one of the sharpest misses in years. And yet the Toronto stock market rose. That paradox, bad economic news lifting stocks, is the story of the week, and it comes just weeks before a pivotal Bank of Canada decision.
What Happened to Canadian Jobs in September?
Statistics Canada reported a loss of 68,300 jobs in September, when economists had forecast a gain of roughly 9,000. Full time work fell by 35,400 and part time by 32,900. The unemployment rate ticked up to 6.5% from 6.4%, and the participation rate slipped to 64.8%, the lowest outside the pandemic in 29 years. It was the second straight monthly decline.
The damage was concentrated. Education, health care and social assistance shed a combined 58,400 positions, hit partly by the government's cut to international student permits. Manufacturing, the sector most exposed to US tariffs, lost 12,700. Young workers aged 15 to 24 lost 48,000 jobs. With September's drop, Canada has now lost a net 41,200 jobs so far in 2026, a stark reversal from the 211,300 gained in the same stretch of 2025.
Why Did the TSX Rise on Bad News?
This is the classic "bad news is good news" trade. A weak labour market makes interest rate hikes far less likely and raises the odds that borrowing costs stay low or fall, and lower rates support stock valuations. Canada's blue chip index rose on Friday in broad based gains as investors bet the Bank of Canada will stay on hold. For US based investors, the simplest way to track the whole market is the iShares MSCI Canada ETF (EWC), or you can browse the largest names on our Canadian stocks hub.
What Will the Bank of Canada Do on October 28?
The Bank of Canada's policy rate sits at 2.25%, and its next decision lands on October 28. The soft jobs report poured cold water on any remaining talk of rate hikes, and economists at banks like TD now expect the central bank to hold steady. Notably, the US Federal Reserve meets the very same day, so October 28 is a double header for North American rates.
How This Hits Canadian Stocks
A cooling economy with steady rates is a mixed backdrop. The big banks, Royal Bank of Canada (RY) and Toronto-Dominion (TD), are sensitive to both rates and credit quality, so a weaker labour market is a yellow flag for loan losses even as lower rates help. Energy heavyweights Enbridge (ENB) and Canadian Natural Resources (CNQ) track oil more than jobs, and tech bellwether Shopify (SHOP) trades on growth and US demand. The common thread: October 28 matters more than any single stock right now.
Track Canadian stocks on Stock Market ROIFrequently Asked Questions
How many jobs did Canada lose in September 2026?
Canada lost 68,300 jobs in September 2026, far worse than the gain of about 9,000 economists expected. The unemployment rate rose to 6.5% and the participation rate fell to a near 30 year low.
Will the Bank of Canada cut rates in October 2026?
The Bank of Canada decides on October 28. Its rate is 2.25%, and the weak jobs report has strengthened expectations that it will hold steady rather than hike.
Why did the TSX go up after weak jobs data?
Weaker jobs data makes rate increases less likely, and lower for longer interest rates tend to support stock valuations, so the index rose even as the economic news disappointed.
The Bigger Picture
Canada heads into its October 28 rate decision with a labour market that has erased an entire year of gains and a participation rate at generational lows. That stands in sharp contrast to the United States, where stocks just closed a record week, as we covered in our weekly market recap. With the Bank of Canada and the Federal Reserve both deciding on the same day, October 28 will set the tone for North American markets into year end.
This article is for informational purposes only and is not financial advice. Always do your own research before investing.
