Friday's jobs report for August has huge implications for 401(K)s and those buying homes

The latest jobs report is 'consistent with a slowing economy and cooling off in the labor market,' said New York Federal Reserve President John Williams following the data's release.

In a speech, Williams endorsed rate cuts.

'It is now appropriate to dial down the degree of restrictiveness in the stance of policy by reducing the target range for the federal funds rate,' he said before the Council on Foreign Relations in New York.

Average hourly earnings increased by 0.4 percent on the month and 3.8 percent from a year ago, according to the Labor Department data released Friday.

These figures were both higher than the estimates for 0.3 percent and 3.7 percent hikes.

The average hourly workweek also rose up by 0.1 hour, to 34.3 hours last month.

Economists are watching this measure closely for underlying signs of weakness among employers, which could affect how much workers earn.

Manufacturing, in particular, is showing signs of weakness, losing 24,000 jobs last month.

Retail also lost 11,100 jobs in August, amid widespread store closures and bankruptcies.

Construction, on the other hand, led gainers with 34,000 new jobs, followed by Government which added 24,000 jobs.

Healthcare also added 31,000 jobs.

The S&P 500 edged up slightly upon opening, following the Labor Department data released Friday, rising 0.1 percent.

The Dow Jones Industrial Average rose 0.4 percent in early trading, while the Nasdaq declined 0.4 percent.

Investors are optimistic that the Fed will cut interest rates at its next meeting. They now see a 50-50 chance of either a large (half point) or a typical (quarter point) Fed rate cut in September.

The good news from the August jobs report is that the labor market isn't weakening as quickly as July's shaky report would have you believe, said Nick Bunker, Economic Research Director at Indeed.

The bad news is that the labor market's strength keeps fading, he said.

'Large downward revisions to data from earlier in the summer put the 3-month average of job gains at 116,000 per month, lower than the pace needed to simply tread water and below 2019's average clip.

'The unemployment rate may have ticked down, but the market's overall momentum suggests joblessness is more likely to keep rising than to fall.'

The Federal Reserve is set to cut interest rates later this month, he added.

'What's not clear is the scale and speed of the cutting. Help seems like it's on the way, but we'll have to see if it will be enough and if it will come in time.'

The Federal Reserve cutting interest rates at its next meeting this month is now seen as a certainty.

Credit card rates change in-line with the Fed's benchmark figure, so would quickly reflect a cut and provide some respite for borrowers.

Mortgage rates are already on the way down, averaging at 6.35 percent for a 30-year fixed-rate deal, as of latest Freddie Mac data from September 5.

Benchmark borrowing costs do not directly affect mortgage rates, but home loans do track the yield on 10-year Treasury bonds.

The bonds are influenced by several factors including predictions around inflation, Fed actions and investor reactions as a result.

This means home loan costs will dip when banks think future cuts are likely.

Elevated mortgage rates have been a deterrent for homebuyers for the last several years, alongside high property prices and a shortage of homes for sale.

Declining mortgage rates would be a boost for those looking to refinance or buy a home, and experts hope this would begin to get the housing market moving.

Any extreme moves in the stock market will impact Americans' 401(K) retirement accounts, which tend to be invested in the major indexes.

The shock jobs report last month sparked a major market sell-off, which saw stocks plummet and 401(K) holdings see their values hit.

The market has since largely recovered, however, and market reaction to August's job report looks likely to be muted.

The Federal Reserve is expected to cut interest rates at its September meeting, and this latest report does not change that.

Investors will now be questioning by how much the Fed will cut rates.

The central bank has held benchmark borrowing rates at a 23-year high between 5.25 percent and 5.5 percent for over a year.

Markets are weighing up whether Chair Jerome Powell and Fed officials will cut interest rates by a quarter-percentage-point this month, or make a larger half-point reduction.

Stock futures fell on Friday as investors reacted to weaker-than-expected job growth in August.

The S&P 500 fell 0.6 percent, the Dow Jones Industrial Average dropped 0.4 percent and the Nasdaq slid 1 percent immediately following the release of the report.

While the unemployment rate met expectations, jobs growth was slower than economist forecasts.

In July, a weak report sparked a market sell-off, amid fears the US economy was heading for a recession.

The unemployment rate dropped to 4.2 percent in August, down from 4.3 percent the month prior.

The US economy added 142,000 jobs in August, below the forecast of 161,000.

This reflects a slower labor market, which should clear the way for a Federal Reserve rate cut later this month.