With the economy struggling, 41,000 jobs were lost in July, but the unemployment rate continued at 6.9 per cent as the number of job seekers remained approximately the same as the previous month, Statistics Canada reported.

The drop in employment, which partly offset the 83,000 increase in jobs in June, was concentrated in full-time work, StatsCan said. Overall, there has been little net employment growth since the beginning of the year, the agency said.

The number of employees in the private sector fell by 39,000 in July, partly offsetting a cumulative gain of 107,000 in May and June. The information, culture and recreation sector were hardest hit, losing 29,000 positions, followed by construction, which shed 22,000 employees.

Balancing those losses was an increase of 26,000 jobs in transportation and warehousing. It was the first job gain for that group, which has been battered by U.S. tariffs, since January.

Manufacturing, also disrupted by U.S. protectionist measures, recorded its second consecutive month of modest job gains with 5,300 positions added in July. But, on a year-over-year basis, manufacturing has lost 9,400 jobs.

There was little change in the number of public sector employees and in the number of self-employed workers in July.

A weak summer job market led to a decline of 34,000 positions for youth aged 15 to 24. The employment rate, the proportion of all those in this group with a job, fell to 53.6 per cent–the lowest level since November 1998 (not including the pandemic years).

RBC senior economist Claire Fan in a note said while the “labour market remains softer than usual,” the bulk of damages from the U.S. tariffs could already be finished. “Leading indicators of hiring demand (business sentiment, job openings data) continue to stabilize in the summer after more pronounced cooling in the spring,” Fan wrote. “We look for the Canadian unemployment rate to peak soon around 7%, and do not expect further interest rate cuts from the BoC.”