WASHINGTON (NEWSnet/AP) — U.S. hiring decelerated sharply last month in the face of high interest rates as employers added an unexpectedly weak 114,000 jobs.

Friday’s Labor Department report showed a drop from the 179,000 jobs created in June. Forecasters had expected to see 175,000 jobs in July. The unemployment rate rose to 4.3%, highest since October 2021, as the number of jobless Americans rose by 352,000.

The economy had proven unexpectedly sturdy in the face of the Federal Reserve’s campaign to tame inflation with high interest rates. The Fed raised its benchmark rate 11 times in 2022 and 2023, taking it to a 23-year high.

But the higher borrowing costs appear to be taking a toll.

The unemployment rate has risen for four consecutive months. It’s jump to 4.3% in July crossed a tripwire that historically has signaled that the United States is in recession — though economists say that metric probably is not reliable amid the circumstances of the post-pandemic economy.

In another sign that the labor market is cooling, average hourly wages rose just 3.6% from July 2023, smallest year-over-year gain since May 2021 and a development likely to ease inflationary pressure in the economy.

Jobs gains were also concentrated in a few industries.

Healthcare and social assistance firms added 64,000 jobs last month, accounting for 56% of hiring. Restaurants, hotels and bars added nearly 26,000 jobs.

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