Last Updated on January 24, 2019

The U.S. labor market slowed last month after a long stretch of job creation, fanning worries that global turmoil is weighing on the domestic economy and diminishing expectations that the Federal Reserve will raise interest rates later this month.

According to the Labor Department, September saw Employers added 142,000 jobs, while gains in July and August were revised down by a combined 59,000 positions. The job creation was enough to keep unemployment at a seven-year low of 5.1%. Currently the share of Americans working or looking for work is the lowest in almost four decades.

The latest reading highlighted a widening divide in the U.S. economy: Industries most exposed to weakness abroad—factories and energy companies—have held off hiring or even shed workers this year as the strong dollar along with depressed oil prices and a slowdown in key economies such as China, negatively affects them. Meanwhile, service providers such as restaurants and hospitals continue to expand, with Americans stepping up purchases of homes and cars.

The payrolls report knocked down the prospect of a Fed rate increase, at least at the next meeting of policy makers’ this month. The central bank, which last raised rates in 2006, held off in September due mainly to worries about global weakness sapping the U.S. economy’s strength. Investors are now focusing on the Fed’s mid-December meeting as the next realistic possibility for lifting the bank’s rate target from zero after seven years.

Private-sector economists estimate overall economic growth slowed to a rate of between 1% and 2% in the third quarter, due largely to the drag from trade. But many still predict the labor market and economy will rebound from its latest slump.

Michael Gapen, chief U.S. economist at Barclays, said that the market would muddle through but it would take more than a few months to do so.

Markets on Friday initially indicated concerns about the state of the economy, pushing the 10-year Treasury yield below 2% to the lowest level since the market turmoil of late August. But stocks, after an early drop, reversed course to end with a healthy gain.

Companies across the U.S. are increasingly reporting fallout from the strong U.S. dollar and slowdown in Asia. Those concerns are expected to draw attention as firms begin announcing third-quarter earnings.

The mining industry, which including oil and natural-gas drillers, has lost 102,000 jobs since December.

According to Graves & Co., a consulting firm based in Houston, over 200,000 worldwide layoffs has occurred in the energy sector in the year since oil prices plunged more than half to less than $50. As U.S. producers have come to accept that there will be no quick rebound in the oil market, they are preparing for further layoffs.

Chesapeake Energy Co., once one of the largest U.S. shale drillers, is reducing its workforce by 15%, or 750 people, with most of the cuts coming at its Oklahoma City headquarters. Houston-based ConocoPhillips, the largest independent oil-and-gas producer in the U.S., is eliminating 1,800 full time jobs and another 1,000 contract positions, on top of 1,500 workers cut last spring, the company said last month.

Big firms that help oil companies drill and frack wells, including Halliburton, Schlumberger and Baker Hughes, have laid off tens of thousands of employees, from engineers and project managers in Texas to roughnecks in the shale fields of Colorado, Oklahoma and North Dakota. The ripple effects across the smaller private companies that do subcontracted well work for them have been profound, with thousands more contract workers let go as drilling activity grinds to a halt.

However, many domestically oriented sectors continue to expand as millions of Americans employed in recent years have stepped up spending on a broad range of goods and services. Retailers, benefiting from the boost to Americans’ incomes due to lower gasoline prices, added 24,000 jobs in September. Over the past year, the restaurant and bar industry has added 349,000 jobs.

However, weakness still remains in the labor market. Workers’ hourly wages dipped by a penny last month after jumping in August, maintaining their choppy path that has kept growth at a subpar 2% pace throughout the economic expansion. From a year earlier, average hourly earnings climbed 2.2%.

The labor-force participation rate—reflecting workers either with jobs or actively looking for work—fell to 62.4%, the lowest since late 1977. About six million people are stuck working part time because they can’t find full-time work.