US job growth was weaker than expected last month, raising concerns that the world’s largest economy is beginning to weaken under the weight of higher interest rates.

Employers added 142,000 jobs in August, fewer than the roughly 160,000 jobs analysts had predicted, the U.S. Labor Department said. It also said job gains in the previous two months were smaller than previously estimated.

However, the unemployment rate declined, falling to 4.2% from 4.3% in July.

The report is one of the most important indicators of the US economy and comes at a critical time: voters are considering their presidential candidates for the November election and the US Federal Reserve is debating its first interest rate cut in four years.

Analysts said the latest figures kept the Federal Reserve on track for a rate cut at its meeting this month, but they would do little to answer questions about the direction of the U.S. economy or the size of the rate cut.

“Rarely have we seen such decisive numbers – unfortunately, today’s employment report falls short of fully resolving the recession debate,” said Seema Shah, chief global development strategist at Principal Asset Management.

Rapidly rising prices in 2022 prompted the US Federal Reserve to raise its key interest rate to 5.3% – a roughly 20-year high.

Economic growth slowed amid higher borrowing costs for homes, cars and other debt. While this helped ease inflationary pressures, it also increased market nervousness.

With inflation easing, falling to 2.9% in July, the Fed is now under pressure to cut interest rates and avert a further economic slowdown.

Employment gains in August were below expectations but higher than in July, when a slowdown sparked fears and caused turmoil on the stock markets for several days.

Most of the new hires last month were made in the construction and healthcare sectors, while jobs were cut in manufacturing and retail.

Ms Shah said the data in Friday’s report, while mixed, contained enough troubling signs to suggest the Fed should make a deeper cut.

“All in all, given the subdued inflation pressures, there is no reason for the Fed not to play it safe and bring interest rates forward,” she said.

Others said the gains were just stable enough to justify a 0.25 percentage point cut, as markets have long predicted, but this could be a sign that there will be deeper cuts than expected in the coming months.

The Fed’s decision will be “close,” said Paul Ashworth, chief North American economist at Capital Economics.

“The labor market is clearly experiencing a significant slowdown,” he said, adding that the latest figures were “overall still consistent with an economy that is experiencing a soft landing and not plunging into recession.”

Concerns about the economy are a central theme in the US election campaign.

According to polls, a majority of Americans already believe that the United States is experiencing a recession, even though economic growth last year was a solid 2.5 percent.

Donald Trump claims the economy is on the verge of a “crash,” and his campaign team quickly seized on the latest numbers to attack Vice President Kamala Harris, issuing a press release titled “Warning Lights Flash as Kamala’s Economy Continues to Weaken.”

The Democrats defended their record by arguing that the US had weathered the pandemic and inflation better than many other countries.

They say the slowdown is a sign that the economy is returning to a more sustainable growth pace after the post-pandemic boom.

“Although hiring has declined, the U.S. labor market continues to deliver solid employment gains and wage growth that is consistently above inflation,” the White House Council on Economic Advisory Board said in a blog post.