10:22 AM EDT, 09/05/2025 (MT Newswires) -- The US economy added fewer jobs than projected in August as the unemployment rate ticked up, indicating a further slowdown in the labor market that prompted some market participants to bet on a bigger interest rate cut by the Federal Reserve later this month.

Total nonfarm payrolls rose by 22,000 last month, the Bureau of Labor Statistics reported Friday, falling short of a 75,000 increase expected in a survey compiled by Bloomberg. Gains for July were revised up by 6,000 to 79,000, while June payrolls were adjusted downwards by 27,000 to show a 13,000 decrease, the BLS said.

The unemployment rate rose to 4.3% as Wall Street expected, accelerating from 4.2% in July.

"There's no escaping that the labor market is softening, and quickly," TD Senior Economist Thomas Feltmate said in a report. "Fed officials have become increasingly concerned about the downside risks to the labor market, and this morning's report will not assuage those fears."

The odds of a 25-basis-points rate cut on Sept. 17 fell to 88% on Friday from 96% on Thursday as Fed funds futures priced in a 12% chance for a reduction by half a percentage point, according to the CME FedWatch tool.

Friday's data followed Automatic Data Processing (ADP) saying on Thursday that private-sector employment increased less than expected last month. Government data on Wednesday showed that job openings dropped in July for the second month in a row.

Last month, Fed Chair Jerome Powell indicated a potential monetary policy pivot, saying that downside risks to employment were rising, while the effects of tariffs on inflation will likely be short lived.

Private payrolls advanced by 38,000 in August, decelerating from a 77,000 gain the month prior and missing the Bloomberg consensus of 75,000, BLS data showed. The service industry added 63,000 jobs last month, while employment for the goods-producing sector declined by 25,000.

"US labor market deterioration intensified in August with net job gains slumping dangerously close to stall speed," Scott Anderson, chief US economist at BMO, said in a report. "This raises the risk of a harder landing for consumer spending and the economy in the months ahead."