Canada’s labour market contracted sharply in July, with Statistics Canada reporting a net loss of 40,800 positions—the biggest monthly decline since the depths of the pandemic and well below economists’ expectations for a gain of about 10,000 jobs. The unemployment rate held at 6.9%, slightly beneath the 7.0% forecast but still a multi-year high. The setback was concentrated in full-time employment, which fell by 51,000, while part-time work added 10,300 positions. The participation rate slipped to 65.2% from 65.4%, pulling the overall employment rate down to 60.7%, its weakest level in eight months. Youth aged 15 to 24 were hardest hit, lifting their unemployment rate to 14.6%, the highest since 2010 outside the pandemic years. Average hourly pay for permanent employees rose 3.5% from a year earlier, up from 3.2% in June, a pace closely watched by the Bank of Canada for inflation signals. Job losses were broad-based, led by information, culture and recreation (-29,000), construction (-22,000) and business, building and other support services (-19,000); transportation and warehousing added 26,000 positions. Statistics Canada said overall employment has shown little net growth this year as U.S. sector-specific tariffs on steel, aluminum and autos pressure manufacturers and weigh on hiring plans. The combination of weakening head-line employment and still-firm wage growth leaves policymakers assessing whether labour-market slack is increasing quickly enough to curb inflation.