The January jobs report released by the U.S. Bureau of Labor Statistics on Friday contained both hopeful and worrying news for the Federal Reserve.

The report showed that the U.S. economy added 517,000 jobs in January, and the unemployment rate fell to 3.4%, surprising economists who had expected a much weaker number. This suggests that the labor market is still strong despite fears of a looming recession.

However, the report also showed that wage growth was weaker than expected, with average hourly earnings increasing by only 2.9% over the past year. This is a worrying sign for the Fed, as wage growth is an important indicator of economic health.

In addition, the report showed that the number of long-term unemployed Americans – those who have been out of work for 27 weeks or more – was little changed in January, suggesting that there are still many people who have yet to benefit from the strong labor market.

Overall, the report was better than expected, but there are still signs of weakness that could lead to a slowdown in the coming months. As Federal Reserve Chairman Jerome Powell said in a press conference following the release of the report, “We are watching developments closely and will act as appropriate to sustain the expansion.”