WASHINGTON, June 6:US job creation slowed in May and the unemployment rate fell back to a 29-year low. but the data failed to offer a smoking gun that would persuade the Federal Reserve to raise interest rates, says Reuters.

The Labour Department said yesterday the number of workers on payrolls outside the farm sector grew a minuscule 11,000. But that followed a surge in employment of 343.000 in April, revised up from the previously reported gain of

The jobless rate fell to 4.2 per cent, matching the rate re-;cently seen in March and not [ seen before that since February

1970. The rate was 4.3 per cent in April.

'The numbers today take a little of the pressure off the Fed, but only a little," said Douglas Lee. chief economist at HSBC Washington Analysis. "It's pretty clear that the trend is that the labour market is no longer tightening. It is running at a more stable kind of rate."

US economists in a Reuters survey had expected payrolls to Sow by 216.000 and predicted e unemployment rate would stay steady at 4.3 per cent.

Financial markets have been jittery in the run-up to the I release, looking for clues on • i whether the Federal Reserve is likely to raise interest rates at a

meeting later this month. The 1 Fed has become concerned that the economy may be growing too quickly and that inflationary pressures may begin to build, especially in the job market.

In an interview shortly after the jobs data. Federal Reserve Governor Edward Kelly said the latest figures weighed in on the side of suggesting the economy might at long last be slowing down, but He said "it’s far from definitive."

The tenor of Kelley’s remarks made clear he was keeping an open mind about J whether he and other Fed poli-cymakers should raise interest;

1 rates to cool the economy when)

; they meet on June 29-30.

; "We do definitely still have tight labour markets," Kelley said. "Formation of new jobs: for the year continues to be ' strong and continues to feed new spending power into the ' economy.

But Kelley said that there were no clear signs that wage inflation had begun to build.

The inflation-sensitive US bond market surged briefly on the report’s release but then fell back down. In late trading the benchmark 30-year US. Treasury bond was down 3/32 point, sending its yield, which moves in the opposite direction of the; iprice, up to 5.97 per cent, its I highest level more than a year.

The Dow Jones industrial average rose 136.15 points to close unofficially at 10,799^84.

TFyou want to see signs of a slowing economy there's the 11,000 headline Jobs figure." he told Reuters Television. "If you. want to see signs of incipient inflation, there's the upward revision to the average hourly earnings data.”

The report showed average hourly earnings, a closely watched gauge of wage inflation. grew strongly in May. up 5 cents to $13.19. Earnings for March and April were revised up. in part because the department made a computer error in their initial calculations of them. _