Getting EISDIR: illegal operation on a directory for npm library when running jest tests

Question

When running jest unit tests for an Angular 14 project, I am getting the following message:

FAIL   client  apps/client/src/app/modules/some-file.spec.ts
● Test suite failed to run

       EISDIR: illegal operation on a directory, read

       > 1 | import party from "party-js";

Project is running with Angular 14 and NX 14, Jest 28.

Test section in angular.json looks as the following:

"test": {
      "builder": "@nrwl/jest:jest",
      "outputs": [
        "coverage/apps/client"
      ],
      "options": {
        "jestConfig": "apps/client/jest.config.ts",
        "passWithNoTests": true
      }
}

Building, serving and linting works with no issue.