The major domestic equity indexes chalked moderate gains on Friday as a tepid jobs report kept expectations muted for another interest rate hike this year, as we began what is usually a typically dour month for stocks on a positive note.

Job growth slowed more than expected during August after two straight months of substantial increases. The Labor Department reported Friday morning that nonfarm payrolls increased by 156,000 jobs last month.

As a result, the odds from the futures markets are for a 39 percent chance that the Federal Reserve would raise rates at its December meeting, similar to bets earlier in the week, according to the CME Group’s FedWatch tool.

Investors were also digesting other economic data. Construction spending unexpectedly fell in July, striking a nine-month low, but the Institute for Supply Management said its index for factory activity increased to 58.8 during August, the highest reading since April 2011.

Energy and materials led among major stock sectors while utilities lagged.

The S&P 500 hovered near all-time highs as major stock indexes marked gains for a second straight week. The Nasdaq tallied a record closing high after minting its best week of the year.

The benchmark S&P had posted a 0.06 percent gain in August, its most sluggish monthly performance since March’s slight decline. September ranks as the worst month for stocks, according to the Stock Trader’s Almanac.

Shares of major automakers climbed after the companies reported better-than-expected August sales and issued optimistic outlooks as Houston area residents replace cars and trucks after Hurricane Harvey. General Motors rose 2.2 percent and Ford gained 2.9 percent.

Lululemon Athletica rose 7.2 percent after the yoga and leisure apparel maker reported profit and revenue that exceeded expectations.

Approximately 5.1 billion shares changed hands on the major domestic equity exchanges, a number that was below the 5.8 billion share daily average over the last 20 sessions.

Jobs Number Less Than Expected

Nonfarm payrolls slowed more than expected in August after two straight months of hefty gains, but the pace of increase should be more than sufficient for the Federal Reserve to announce a plan to start trimming the massive bond portfolio it built to support the economy.

According to a report released by the Labor Department on Friday morning, nonfarm payrolls increased by 156,000 jobs last month. The economy created 399,000 jobs in June and July. Still, August’s gains were far more than the 75,000 to 100,000 jobs per month needed to keep up with growth in the working-age population.

Underscoring labor market strength, manufacturing payrolls surged by 36,000 jobs, the most in four years, with the motor vehicle sector adding 13,700 positions.

Persistently sluggish wage growth could, however, make the Fed cautious about raising interest rates again this year. The economy created 399,000 jobs in June and July.

Average hourly earnings rose three cents or 0.1 percent after advancing 0.3 percent in July, keeping the year-on-year gain in wages at 2.5 percent for a fifth consecutive month. Americans also worked fewer hours in August. The average workweek slipped to 34.4 hours from 34.5 hours in July.

August’s moderation in employment growth, which pushed payroll gains below the 176,000-monthly average for this year likely reflects a seasonal quirk as well as a dearth of qualified workers. Over the past several years, the initial August job number has tended to exhibit a weak bias, with revisions subsequently showing strength.

The department said Hurricane Harvey, which devastated parts of Texas, had no “discernable” effect on payrolls as the disaster struck after the survey period for the August employment report. The storm could hurt September payrolls if the disruption from the flooding is prolonged.

With job growth slowing, the unemployment rate ticked up one-tenth of a percentage point to 4.4 percent.

That was also corroborated by a second report on Friday from the Institute for Supply Management showing its index for factory activity soared to 58.8 in August, the highest reading since April 2011, from 56.3 in July. A measure of factory employment raced to its highest level since June 2011.

The employment report showed construction jobs jumped 28,000 last month. That was the largest gain since February and came despite a lull in homebuilding activity and home sales. A third report on Friday showed construction spending falling to a nine-month low in July.

While August’s job gains likely keep the Fed on course to outline a plan to start shrinking its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities at its Sept. 19-20 policy meeting, tepid wage growth casts doubts on a December interest rate increase.

The anemic wage gains came on the heels of a report on Thursday showing the Fed’s preferred inflation measure, the personal consumption expenditures price index excluding food and energy, increased 1.4 percent in the 12 months to July – the smallest rise in just over 1-1/2 years.

The financial markets are pricing in a roughly 36 percent probability of a rate hike at the Fed’s December meeting according to CME Group’s FedWatch program. The Fed has increased borrowing costs twice this year.

Lack of strong wage growth raises concerns about the sustainability of a recent surge in consumer spending, which spurred the fastest economic growth in more than two years in the second quarter.

The labor market has continued to strengthen even as hopes for a promised tax cut this year have faded.

The private services sector led the slowdown in job gains last month, with payrolls rising 95,000. That was the smallest gain since March and followed an increase of 179,000 jobs in July. Retail employment increased 800 last month as a surge in hiring at building material and garden supply stores was offset by continued layoffs at clothing retailers.

Payrolls at non-store retailers rose only 700 despite online retailer holding a series of job fairs to hire about 50,000 workers last month. Government hiring declined for a second straight month in August.

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