Altogether, the report suggested that the job market is slowing, but not imploding, more than two years into the Fed's campaign to slow the economy with higher interest rates. That has kept Fed officials noncommittal and investors guessing about just how much the Fed will cut rates later this month.
Fed policymakers raised interest rates starting in 2022 to tap the brakes on a hot economy. At the time, hiring was rapid and wage growth robust, and officials worried that a burst of rapid inflation would not fade on its own against that backdrop. They ultimately lifted borrowing costs to a more than two-decade high of 5.3%, where they remain.
But inflation has been cooling notably, and wage gains have been steadily moderating, so Fed officials have become increasingly wary of overdoing it. They wanted to return the job market and economy to a sustainable pace, but they do not want to cause either to crash.
That is why the Fed is poised to lower interest rates. The question has been whether policymakers would cut rates by a quarter percentage point or a half percentage point at their Sept. 17-18 gathering. That was one reason Wall Street was intently focused on Friday's jobs report: If it showed clear cracks in the labor market, investors expected it to prod the Fed toward a more dramatic rate cut.
But because the report contained both good and bad news, it did not seal the deal on either a small or a large rate cut. Two important Fed officials noted that the labor market is slowing and that rates need to come down, while keeping the possibility of a move of either size on the table.
John C. Williams, president of the influential Federal Reserve Bank of New York, spoke shortly after the data came out.
The fresh jobs data was "consistent with what we've been seeing: a slowing economy, a cooling-off in the labor market," he said. He later told reporters that he did not have a personal view on the size of the rate cut yet.
Christopher J. Waller, a Fed governor, offered similar comments, although the way he framed them left some Wall Street analysts with the impression that he would favor a quarter-point reduction in September.
"The labor market is continuing to soften but not deteriorate, and this judgment is important to our upcoming decision on monetary policy," he said.
"As of today, I believe it is important to start the rate cutting process at our next meeting. If subsequent data show a significant deterioration in the labor market, the FOMC can act quickly and forcefully to adjust monetary policy," he added, referring to the Federal Open Market Committee.
Because of the way he sequenced that line -- first signaling that rate cuts should start, then suggesting that they could speed up if needed -- some economists thought he meant that rate cuts would start small and then adjust.
Stocks sank after Waller spoke, perhaps in part because investors were disappointed that rate cuts might take longer. Bets for a quarter-point rate cut in September increased following his remarks.
Still, Waller's comments stopped well short of a firm commitment. The door remains open to a move of either size.
Once the Fed starts to cut borrowing costs, those lower interest rates should slowly trickle out through the economy to keep growth from slowing as much. Already, mortgage rates have started to nudge down thanks to expectations of lower Fed borrowing costs.
That could shore up demand and help to prevent the job market from slowing a lot more.
"We do not seek or welcome further cooling in labor market conditions," Fed Chair Jerome Powell said during a speech in late August.