The US economy added fewer jobs than expected in August while the unemployment ticked lower.

Data from the Bureau of Labor Statistics released Friday showed the labor market added 142,000 nonfarm payroll jobs in August, fewer additions than the 165,000 expected by economists.

Meanwhile, the unemployment rate fell to 4.2%, from 4.3% in July. August job additions came in higher than the revised 89,000 added in July. Additionally, revisions to the June and July labor reports showed the US economy added 86,000 fewer jobs than initially reported in those months.

Wage growth, an important measure for gauging inflation pressures, rose to 3.8% year-over-year, up from a 3.6% annual gain in July. On a monthly basis, wages increased 0.4%, higher than the 0.2% seen the month prior.

Also in Friday’s report, the labor force participation sat flat from the month prior at 62.7%.

At the center of Friday's report is a debate over how severely the Fed should cut interest rates at its meeting later this month. During a late August speech, Federal Reserve Chair Jerome Powell said the cooling in the labor market has been "unmistakeable" and added that the central bank does not "seek or welcome further cooling in labor market conditions."

Further signs of cooling in the labor market were seen earlier in the week. ADP's National Employment Report for August showed private payrolls in the US added 99,000 jobs during the month, well below economists' estimates for 145,000 and fewer than the 122,000 jobs added in July. The August data marked the fifth straight month payroll additions had slowed from the month prior. Meanwhile, data out Wednesday showed July ended with the lowest amount of job openings in the US labor market since January 2021.

This data had prompted markets to price in a 43% chance the Fed cuts rates by 50 basis points by the end of its September meeting, per the CME FedWatch Tool.

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A construction worker pauses to catch a breeze while taking a break from work under an American flag in Malibu on July 3, 2024. (Genaro Molina/Los Angeles Times via Getty Images) (Genaro Molina via Getty Images)

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.