The U.S. labor market added 147,000 jobs in May, according to the Labor Department, a gain that came in below many economists’ expectations. At the same time, the unemployment rate moved up to 4.3% from 4.2% in April, pointing to a modest cooling in hiring conditions.

The report suggests the economy is still creating jobs, but at a slower pace than earlier in the year. May’s figures add to evidence that employers are becoming more cautious as higher borrowing costs and uneven business demand continue to shape hiring decisions.

Labor market data remains a key signal for policymakers and investors watching inflation and growth. A steady rise in unemployment could give the Federal Reserve more room to hold interest rates steady or consider easing later, though one month of data is not enough to define a clear trend.

Even with the slower pace, the job market remains historically stronger than it was in much of the past decade. The latest numbers will likely keep attention focused on whether hiring holds up through the summer or weakens further.