Overall job numbers were lower than expected with the U.S. adding 175,000, the smallest monthly increase in six months. Unemployment rose from 3.8% in March to 3.9% in April but remained below 4% for the 27th consecutive month, evidence of a historically strong job market. Elsewhere in Friday’s report, wages grew 0.2% in April from the prior month, a little bit below the 0.3% that was forecasted.

Jobs data and wage growth are used as bellwethers for inflation because they can offer an indication of consumers’ willingness and ability to spend. If consumers are employed and able to find new jobs easily, they can spend out in the world. That in turn boosts demand, which means businesses can set higher prices for their wares. Furthermore, when wages continue to go up, businesses usually end up having to pass some, or all, of those cost increases onto consumers in the form of higher prices. When wages and employment levels trend down it puts less pressure on prices, which is why even the slight declines in this job report caught economists’ eye. 

But it’s still too early to draw definitive conclusions, according to Glenmede’s chief of investment strategy and research, Jason Pride. 

“One month does not make a trend, but today’s jobs report likely gives the Fed some much needed assurance that higher rates may be starting to do their job,” he said in a note. 

For there to be a clear indication inflation is coming under control, wage growth would need to stay below 0.3% for at least three consecutive months, Pride told Fortune in an email. “It’s sort of like a game of tic-tac-toe: Nobody wins if all you can string together is one or two in a row,” he said. 

Meanwhile, consumer inflation accelerated to a 3.5% annual pace in March, still above the Fed’s target of 2%, which it considers to be a stable level of price increases.

Across Wall Street, investors have had to take every major release of economic data with a grain of salt over the past year. At first there were fears of a recession, but those melted away, replaced by hopes of a soft landing (though even that was debated). At the start of the year, when it seemed like the Fed would kick off a year of rate cuts, inflation data wouldn’t budge lower, delaying everyone’s hopes. These whipsawing few months haven’t gone unnoticed. 

“The roller coaster of investor emotions is prevalent as we enter a seasonally weak period,” Comerica Wealth Management chief investment officer John Lynch said in an analyst note. 

In addition to the thrashing data, today’s report showed only a slight increase in unemployment numbers. Economist Paul Krugman pointed out on X that if the figures were expanded to show two decimal places, the unemployment rate went from 3.83% in March to 3.87% in April—an increase of only 4 basis points. Still, it drew some cautious attention from Wall Street on the grounds that it signaled an early slackening in the labor market.    

So far, this inflation fight has been unusual in that its cooling trend hasn’t corresponded with the customary spike in unemployment. That’s given credence to hopes for a so-called soft landing, in which inflation would drop without pushing the U.S. economy into a recession, which invariably consists of layoffs and the subsequent increase in unemployment. The Fed has been attempting to steer the economy toward a soft landing since inflation climbed to its 9% high in the summer of 2022. Initial progress toward a soft landing surprised many observers, but now the last mile of inflation is proving to be difficult to tame. 

Inflation has so far remained higher for longer than the Fed and economists had hoped for. That ultimately colored the forecast for rate cuts this year. After some expectations that the first such cut would come in June, the consensus now seems to be that one will happen in the fall. The slightly higher unemployment numbers pointed to an economy that was feeling the squeeze of an interest rate tightening cycle. But they still didn’t prove anything just yet. 

“Especially for tight labor that has been a key tailwind for ongoing inflation, a bit of incremental softening may not necessarily be an unwelcome development, but further progress will need to be seen before investors can expect imminent rate cuts from the Fed,” Pride said. 

The labor market may have already been softer than was reflected in the data, according to Richard de Chazal, an equity researcher at William Blair. He cited some discrepancies between different labor surveys, which may not have properly accounted for the effects of immigration in recent months. Now that they were resolved, the data pointed to a cooler job market than had been previously thought. “Today’s report further helps to confirm that the strength of the labor market is indeed starting to more tangibly wane,” de Chazal said in an analyst note. 

Why that data slows could be just as important as whether it continues to do so. “The employment data was always going to slow, but for potentially two very different reasons,” de Chazal told Fortune in an email. “Either we run out of workers to employ—immigration has helped here considerably—so that’s a good reason. Or companies are actually slowing hiring, and perhaps moving closer to layoffs. That’s less good.”

Economists believe immigration has almost certainly helped keep the job market afloat in recent months. A post-pandemic surge of new workers entering the country is likely to have helped employers fill roles that they otherwise would have been unable to. 

But if employment numbers are falling because companies can’t afford to hire, that’s more problematic and could presage layoffs, which are usually a harbinger of recession. To gauge whether that is indeed the case, “the burden of proof is on corporate profits to exceed forecasts,” Lynch said. 

Because “as margins come under more pressure, the desirability of hanging on to workers fades,” de Chazal added via email.