The U.S. economy added 164,000 jobs in July — right in line with economists' expectations of 165,000 jobs— the Labor Department said on Friday, while the unemployment rate held steady at 3.7%.

Why it matters: The labor market is still the standout of the record long economic expansion, although cracks are beginning to show. The pace of job growth is slowing down, as the government revised its previous predictions to show that the market had added 41,000 fewer jobs than initially estimated over the last two months.

Details:

Wages grew at an annualized pace of 3.2% in July — a slightly higher pace than the 3.1% in June — but still were sluggish compared to the pick-up earlier in this economic cycle and in previous cycles. This is an odd dynamic, considering how low the unemployment rate is.

Job gains were most pronounced in July for the health care, financial and technology sectors.

The manufacturing sector added 16,000 jobs last month— the second straight month of solid gains after a bout of weak hiring. But, as Marketwatch notes, employers are cutting back on hours: the manufacturing workweeks in July was the shortest in 8 years.

What's next: The state of the jobs market is solid but cooling, and a heightened trade war might not help. The Fed, though, has signaled that it's closely watching the trade dynamics and ratcheted up tensions could be enough of a catalyst for another rate cut.

Go deeper: The forever trade war