A sharp decline in job growth and a rise in unemployment signal a slowdown in the U.S. labor market.

U.S. nonfarm payrolls rose by just 73,000 in July, significantly below the forecast of 110,000 and well under June’s sharply revised figure of 14,000 (down from the initially reported 147,000).

The unemployment rate edged up to 4.2% from 4.1% in June, in line with expectations.

The much weaker-than-expected job growth, combined with a substantial downward revision to June’s data and a rise in unemployment, signals mounting signs of a slowdown in the U.S. labor market.

Hiring appears to have cooled amid uncertainty surrounding President Donald Trump’s escalating tariff actions. His announcement of a new list of tariffs on several trade partners came just days before the August 1 trade deal deadline.

The report—considered the most critical monthly labor release—follows disappointing JOLTS job openings data and a stronger-than-expected ADP private payrolls report. It was published just two days after the Federal Reserve’s policy meeting, where the central bank kept interest rates steady at 4.25%-4.50%.

Fed Chair Jerome Powell said after the meeting that the labor market is “in balance,” citing a simultaneous decline in both supply and demand for labor. However, he also noted that this trend indicates downside risks to the economy.

In response, markets have delayed expectations for a widely anticipated September rate cut to October. Still, a growing number of economists believe the Fed may hold rates steady for the rest of the year, as rising tariffs could fuel inflation pressures.