The U.S. economy has been giving off mixed signals this year, with GDP falling for two straight quarters, while demand for workers outstrips supply. Fed Chair Jerome Powell has repeatedly called the labor market unusually strong in recent months, while his comments at Jackson Hole last Friday sent markets into a tailspin. Today's non-farm payrolls numbers - set to be released at 8:30 a.m. ET - will be the next data point the central bank will be looking for when deciding monetary policy in September, meaning investors will be on edge for most of today's session before heading into the holiday weekend.

Economists are expecting 300K jobs were added in August, down from the larger-than-expected 528K added in the previous month, while the unemployment rate is expected to stay at a 50-year low of 3.5%. A strong jobs showing means that FOMC policymakers will likely be considering another 75-basis-point rate increase later this month as they seek to tamp down demand and control inflation while the labor market is strong. The central bank has increased its federal funds rate target range by 225 bps in its past four meetings, with 75-bp hikes at each of the last two.

"If the consensus among economists is close to correct, the number of jobs added in August will be the lowest in over a year," remarked Mark Hamrick, senior economic analyst at Bankrate. However, he points out that hiring gains have averaged 471K per month this year, which is still strong compared to pre-pandemic levels. For example, from January 2019 to January 2020, the U.S. economy only added about 170K jobs per month.