Job creation cooled unexpectedly in September to accompany a slight increase in the unemployment rate, according to government estimates published Friday.

Just 29,000 jobs were added last month, according to the U.S. Bureau of Labor Statistics (BLS), coming in below consensus forecasts north of 80,000 from economists surveyed by Reuters and Dow Jones.

Surprisingly robust job gains in August was revised down to 133,000 from 162,000, as a combined 60,000 jobs were cut from the prior two months’ estimates.

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The BLS also reported that the national jobless rate rose to 4.2% from 4.1% in August and July. Economists had forecast the unemployment rate would remain unchanged at prior-month levels.

Paired with annual wage growth that slowed to 3% over the month, below the rate of inflation, the softer-than-expected jobs report was enough to lower expectations that the U.S. central bank will raise interest rates later this month.

“With inflation still too high, the Federal Reserve is unlikely to cut rates anytime soon,” offered Mike Fratantoni, chief economist of the Mortgage Bankers Association, in commentary shared with Scotsman Guide. “However, these data showing a softer job market may be enough to keep the Fed on hold at their October meeting.”

Job gains in September were concentrated in construction, which added 11,000 positions. The manufacturing sector saw 9,000 job gains, while private healthcare and social assistance added 23,000, though that was about one-third of the previous month’s totals.

Employers shed the most workers last month in the information services sector, which lost 10,000 employees on the heels of 18,000 job losses in July. The financial and professional services sectors each posted their third consecutive month of falling hiring.

Yields on 10-year Treasury notes surged to 5.34% on Thursday — their highest levels since 2002 — before ending the day around 5.25%. They slid about 10 basis points lower immediately following the release of the latest jobs number as investors digested the data, before rebounding to their opening levels by mid-morning.

Policymakers on the Federal Open Market Committee (FOMC) unanimously voted in September to raise the federal funds rate — a benchmark interest rate in the U.S. economy — by 0.25% to its current target range of 3.75% to 4%.

Almost all FOMC members also projected that at least one additional rate hike would be necessary this year to rein in inflation still stuck above the Fed’s stated 2% target. Because the Fed has a dual mandate to maintain price stability and pursue full employment, however, weakness in the labor market could lengthen that timeline.

Though hiring was slower than expected, Fratantoni did not express cause for concern in the higher unemployment rate, saying the slight increase was “largely due to a higher participation rate as more people actively looked for work.”

Market-implied odds of a quarter-point hike occurring at the FOMC’s next two-day meeting on Oct. 28 and 29 declined to 20% after the jobs report was released from 25% one day prior, according to CME FedWatch, which tracks fed funds future prices.

While the trajectory for mortgage rates remains higher for longer, the weak jobs report may improve pricing for some borrowers on the margin. But homebuying confidence among consumers, who already have reported broadly pessimistic views of the economy, could take a hit if job market anxieties escalate.

“Lower borrowing costs improve purchasing power, while slower hiring limits the confidence and life events that drive home sales,” said Sam Williamson, senior economist at title insurance giant First American Financial Corp. “That combination can steady the housing market, though it’s unlikely to spark a broad rebound for the time being.”

Average mortgage rates for typical 30-year home loans jumped to 7.28% over the past week, according to Freddie Mac data, their largest weekly increase in four years. Mortgage rates averaged 7.03% the previous week and 5.98% during the final days of February.