Markets immediately ruled out a September rate hike after August's disappointing jobs report, but there's still a chance the Fed could decide it needs to raise rates soon.

Goldman Sachs chief economist Jan Hatzius is one of the few in the camp that September is more likley. He said Friday a September hike is a close call but it's more likely than a December one, based on the recent Fed comments. He said the probability is 55 percent for September and 80 percent that the Fed hikes this year.

Hatzius, appearing on CNBC, said Fed officials made clear in the comments at Jackson Hole, Wyoming and elsewhere, that they were looking for confirmation that the labor market is making progress. He said: "151,000 is clearly about their estimate of what it takes to improve the labor market over time."

The economy added 151,000 jobs in August and the unemployment rate stayed unchanged at 4.9 percent. Economists had expected 180,000 jobs and an unemployment rate of 4.8 percent. Wage growth slowed to a disappointing gain of just 0.1 percent while some economists had expected 0.3 percent.

"There's still a 1-in-3 chance that the Fed moves. We know there's manufacturing weakness. We expected volatility in this report. August is a fluky month," said Tony Roth, CIO of Wilmington Trust. "The wage growth is cloudy. We're getting mixed signals."

Strategists had said a jobs report with nonfarm payrolls of 200,000 or more and strong components, like higher wages, would have possibly nudged the Fed to raise interest rates at its Sept. 20-21 meeting.

But curiously, Fed officials had revved up market expectations last week when they said a rate hike in September was possible, knowing the market was tilted toward a December rate hike. Like Wall Street economists, they also know that the jobs report in August has disappointed year after year.

Hatzius said if the Fed doesn't move in September, it's very likely it will in December.

On Thursday, Goldman economists forecast just 165,000 payrolls and pointed out the quirkiness of August reports. They said August payrolls have fallen short of consensus by about 49,000 since 2011, but were revised higher by an average 71,000 in later releases.

The economists also said Thursday that this factor may make the Fed look past the initial report if it is weaker than expected.

"A below-consensus number may well lead the bond market to reduce its expectations for a rate hike, but it is possible that Fed officials would look through moderate weakness given 1) the strength of the June/July payroll gain, 2) their sub-100k estimate of the "breakeven" payroll gain, and 3) the well-publicized tendency for weak first prints in August," wrote the Goldman economists.

Expectations for a September hike began to fade Thursday when ISM manufacturing data showed a shocking contraction . On Friday, fed funds futures showed an immediate drop in the odds for a September hike to about 20 percent but later rose to more than 25 percent.

Stocks rallied on the expectations that the Fed could stay on the sidelines, and the Treasury curve steepened with the Fed-sensitive 2-year yield falling. The 2-year later reversed course and rose above its pre-jobs report levels to about 0.80 percent.

"Today's data supports the case for an increase in the fed funds rate in the foreseeable future as the labor market meanders toward full employment, but is not sufficiently compelling to support a rate hike on September 21," wrote Ward McCarthy, chief financial economist at Jefferies.

Economists have said the Fed could normally hike if job growth was at a level of 150,000, and even 100,000 since that number would still keep unemployment low.

But the bar was higher for the August report because of the sudden emphasis on September by the Fed, the lack of other data to consider before its meeting, and the perceived need for markets to accept the idea of a hike.

"The real weakness is in the detail," said Marc Chandler, head of currency strategy at Brown Brothers Harriman. He said besides the disappointing wage growth, average hours worked declined by 0.1 percent.

The Fed will still be able to consider retail sales on Sept. 15 and Consumer Prince Index inflation data on Sept. 16.

Barclays economists, who had expected a September hike, stuck to their call even though job growth was well below their expectation for 200,000 jobs.

"On the whole, this morning's strong ... employment report, despite the slower pace of job gains, indicates that labor market health remains intact and that therefore economic activity remains solid," Barclays economists wrote. "Furthermore, this print should maintain the confidence of most FOMC members in the outlook. Most members will view this report as consistent with solid economic activity and will believe that that activity will continue to pull inflation upward toward their target. We maintain our call of a September rate hike."

So now the market focuses on Fed officials, and whether they will pedal back on September. San Francisco Fed President John Williams speaks Tuesday night.

Many economists had also expected the Fed to hold off from hiking rates ahead of the election, but there is also an argument that says the Fed made mistakes in the past by not moving when markets were calm.

"Unless there's a really weak retail sales number on the 15th, the Fed could do whatever it wants here," said Roth. "It doesn't mean it didn't learn from its mistakes. I think the Fed may have regretted not moving last September." Roth said, however, the Fed is cautious and more often holds back when it faces a close call.

Roth pointed out that the data has been confusing with the Labor Department reporting a big jump in unit labor costs Thursday.