The job market is cooling down, and expectations for the Federal Reserve to cut interest rates are increasing.

The disappointing employment data released on Friday confirmed concerns that the US labor market may be on the edge of a slowdown, and raised market expectations for the size of the Fed's interest rate cut this year. Investors have already fully priced in expectations for a 25 basis point rate cut at the Fed's September policy meeting. Futures contracts indicate that the market is further betting on a total of three rate cuts this year. Some Fed watchers suggest that the weak jobs data may prompt officials to consider a larger-than-usual 50 basis point rate cut this month, but inflation data due out next week could dampen those expectations. Chief Economist Diane Swonk of KPMG said, "A 25 basis point rate cut is without question. This highlights concerns that cracks in the labor market are widening." George Catrambone, Head of Fixed Income at DWS Americas, pointed out, "The weak employment data can no longer be ignored or attributed to temporary factors."