Canada’s labour market contracted sharply in July, with Statistics Canada reporting a loss of 40,800 positions—the biggest monthly decline since the early months of the COVID-19 crisis and well below every economist estimate. The setback follows an 83,100-job gain in June and has raised concerns that the economy may already have slipped into recession. Despite the drop in headcount, the national unemployment rate remained unchanged at 6.9%, close to the 7% consensus forecast. Job losses were concentrated in full-time and private-sector roles, led by the information, culture and recreation industry and by construction, while manufacturing managed a second consecutive month of modest gains. Youth employment bore the brunt of the downturn: the jobless rate for 15- to 24-year-olds climbed to 14.6%, the highest level in 15 years outside of pandemic lockdowns. Analysts note the July decline is equivalent to roughly 350,000 lost jobs in the United States, underscoring the scale of the shock relative to the country’s population. North American labour weakness is becoming more evident. U.S. employers announced 62,075 job cuts in July—the highest tally since early 2020—according to Challenger, Gray & Christmas, as federal budget reductions and the adoption of artificial intelligence drive deeper staff reductions. The parallel pullback in hiring on both sides of the border is adding to expectations that central banks may face growing pressure to shift policy as growth slows.