The August jobs report showed that the economy added 315,000 jobs in August, and unemployment rose to 3.7%.

Although the labor market is still strong, job growth has cooled off since July, which investors are hoping will be interpreted by the Federal Reserve as a sign that their dual 0.75% back to back rate cuts over their last two meetings have begun to take effect, allowing them to adopt a more moderate policy stance at the next FOMC meeting.

Labor force participation crept up in August from 62.1% in July, to 62.4%, equal to the highest level since March of 2020. Wage gains fell back slightly, only rising 0.3% month over month, and 5.2% year over year.

Central bank officials had been concerned that unusual tightness in the labor market, due to a strong imbalance between job openings and available workers was driving salaries up, and that was adding to inflationary forces affecting prices.

The new data for August will be welcome news to the Federal Reserve, which will see it as confirmation their previous policy moves have begun to take affect, and welcome news to investors, who had feared too steep a drop in job numbers might bode ill for economic conditions going forward, but another report like last month’s unexpectedly hot report would provoke more aggressive policy moves at the next FOMC meeting.

In a note, Sarah House and Michael Pugliese, economists at Wells Fargo, echoed what most economists were saying in response to the numbers when they said,- “August’s jobs report was weaker in the best way possible as far as the Fed is concerned, and may be just what the inflation doctor ordered. Today’s data in isolation tilt the scales toward a 50 bps hike at the FOMC’s September meeting, but does not on its own settle the matter. While the August jobs report keeps hope alive that the Fed may be able to pull off the elusive soft-landing, there remains significant work ahead in quelling the inflation pressures coming from the labor market.”