The highly anticipated August jobs report is expected to serve as the latest piece of economic data indicating that the US labor market is slowing down as investors ponder if further cooling could prompt a more significant interest rate cut from the Federal Reserve in less than two weeks.

The monthly report from the Bureau of Labor Statistics, slated for release at 8:30 a.m. ET on Friday, is expected to show nonfarm payrolls rose by 165,000 in August while the unemployment rate declined to 4.2%, according to consensus estimates compiled by Bloomberg.

In July, the labor report came in far weaker than expected. The US economy added just 114,000 jobs while economists had been expecting 175,000 job additions. Meanwhile, the unemployment rate unexpectedly rose to 4.3%. The combination sent Wall Street into its worst spiral of the year before it recovered throughout the rest of August.

Here are the key numbers Wall Street will be looking at on Friday morning compared to the previous month, according to data from Bloomberg:

The key question entering Friday's report will be whether the data from August confirms the cooling seen in July or shows that prior report overstated developing labor market weakness.

“Amid rising concerns about the labor market health, the August jobs report should reassure," EY senior economist Lydia Boussour wrote in a note previewing the event. "But it'll also confirm a deterioration in labor market conditions. We expect another below-trend payroll gain of 145,000 jobs as business leaders continue to strategically manage their workforce in a slower final demand environment.”

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."

Economists have reasoned this rhetoric from Powell to mean that a week August jobs report on Friday could prompt the Fed to cut the rate by 50 basis points at its September meeting.

"August employment data will be the pivotal factor determining whether Fed officials are likely to start the rate cutting cycle with a 50bp or 25bp cut in September," Citi economist Veronica Clark wrote in a note to clients. "Even if the unemployment rate pulls back slightly, one month of data after many months of increases might not convince Fed officials (or us) that there are not asymmetric risks towards further increases, and softer payroll employment could still have Fed officials cutting rates by 50bp in this case."

Clark and other economists argue that further signs of cooling in the labor market seen this week have already helped build the case for a more aggressive interest rate cut from the Fed.

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 has pushed markets to price in a 39% chance the Fed cuts rates by 50 basis points by the end of its September meeting, per the CME FedWatch Tool.

From a stock market perspective, strategists aren't overly confident that a weak jobs report building the case for further Fed easing would be a positive catalyst for stocks.

"I think if tomorrow's data comes in cool or soft compared to expectations, there will be a negative reaction in the market and likely further selling in a lot of those megacap names that have led us up to this point," SoFi head of investment strategy Liz Young Thomas told Yahoo Finance.

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