"The job market has become less tight within the last year or so, but the unemployment rate we have today by historical standards would be considered very low," Yellen told reporters in Raleigh, North Carolina, Thursday. "My judgment is that we have a good, healthy labor market where we continue to create jobs."

She spoke hours after a private payroll survey showed U.S. companies added the fewest jobs since the start of 2021 in August. In July, the unemployment rate reached 4.3%, up almost a percentage point from the level at the start of last year. U.S. job openings in July also fell to their lowest since the start of 2021.

Those figures have fueled fears about a potential recession. Federal Reserve policymakers have made clear they're not seeking further loosening in the job market, and are widely expected to start lowering interest rates at their next meeting, in two weeks.

Yellen, a former Fed chair, declined to comment on when the U.S. central bank will lower rates, but noted that Chair Jerome Powell did say last month that the time has come to cut. She noted that, amid market expectations for Fed easing, mortgage rates have come down. She also said that they may have further to decline.

After July's disappointing jobs figures and a large downward revision to payrolls in the past year, Fed officials and market participants are paying close attention to the August employment data due Friday. Investors are keen to see whether the figures suggest that Powell and his colleagues might embrace a larger, 50-basis-point cut this month.