While the U.S. economy is slowing, the labor market is holding up better than would be indicated by investor reaction to recent employment data, San Francisco Fed President Mary Daly said Monday.

In an event hosted by the Hawaii Executive Collaborative, Daly said that it was too early to know whether last Friday’s job report showed that unemployment was rising too rapidly, saying she needed more data about the direction of the economy. Daly’s comments come after the jobs report helped spark a market selloff that continued into this week .

“I see an economy that has momentum and we want to keep that,” Daly said.

Not Seeing Widespread, Permanent Layoffs

Daly said that in her conversations with employers in her district, they described a slowing, but not deteriorating, labor market.

“Firms are not laying workers off, firms are simply slowing their rate of hiring,” Daly said. “We’re not seeing widespread, permanent layoffs.”

Daly said that the Fed would likely need to adjust interest rates as inflation moves lower and unemployment ticks higher, but she didn’t lay out a timeline for action.

“We have confirmed that the labor market is slowing,” Daly said.  “It’s extremely important that we not let it slow so much that it tips itself into a downturn.”