The US economy created slightly fewer jobs than expected in August. This is partly due to the weakening of the labor market, but also paves the way for an interest rate cut by the US Federal Reserve later this month.

Nonfarm payrolls rose 142,000 for the month, down from 89,000 in July and below the Dow Jones consensus forecast of 161,000, according to a report from the U.S. Labor Department’s Bureau of Labor Statistics released Friday.

At the same time, the unemployment rate fell to 4.2% as expected.

The number of employed people grew by 120,000 during the month, helping to reduce the unemployment rate by 0.1 percentage point, although the labor force participation rate remained at 62.7%. An alternative indicator that includes discouraged workers and those working part-time for economic reasons rose to 7.9%, the highest since October 2021.

The markets initially barely reacted to the data. Stock futures remained in the red and yields on US government bonds also fell.

While August’s numbers were close to expectations, the two previous months saw significant downward revisions. The BLS cut the July total by 25,000, while the June total fell to 118,000, a downward revision of 61,000.

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