Nonfarm payrolls rose by 73,000, less than almost all economists had forecast, while the unemployment rate ticked up to 4.2%, matching the median projection. Average hourly earnings were up 0.3%, leaving them 3.9% higher over 12 months – outpacing inflation.

U.S. employment growth slowed more than expected in July while the nonfarm payrolls count for the prior two months was revised down by a massive 258,000 jobs, pointing to a deterioration in labor market conditions that puts a September interest rate cut by the Federal Reserve back on the table.

The loss of federal workers was reflected in the numbers, while hiring was flat across a number of industries.