Canada Slips into Recession with 41,700 Job Losses in August

Canada's economy lost 41,700 jobs in August, defying predictions of a 15,000-job gain and marking the first decline in employment since January. The unemployment rate remained steady at 6.4 percent.

The public sector bore the brunt of the cuts, with payrolls dropping by 20,000 last month and down 78,000 since May. Manufacturing, however, added 22,100 positions, mostly in Ontario, to reverse earlier declines and leave employment little changed from a year ago.

Andrew Hencic, director and senior economist at TD Economics, noted that the soft reading may indicate a job market under strain before the latest U.S. tariffs took effect. The Canadian result contrasted with the U.S., where employers added 162,000 jobs in August against expectations of 55,000.

The breakdown of trade negotiations has sparked debate over Ottawa's decision to walk away from a deal that would have preserved tariff-free access for most Canadian exports. Rudyard Griffiths and Sean Speer argue that the move may lead to an escalating trade war, weighing on the broader outlook and potentially requiring pandemic-era government support.