Fresh concerns about rising interest rates were raised last week after the Labor Department reported that the nation's unemployment fell to 4.8% in May, the lowest level since November 1973.

But the closely watched monthly survey of the labor market was otherwise so contradictory that economists and money managers struggled to divine what it meant.

Bond prices initially dipped on the report but then recovered, while bank stocks rallied.

"Weird is the word for the May employment report, but on balance we believe it shows moderation," said Bruce Steinberg, chief economist at Merrill Lynch & Co.

According to the report, made on the basis of a survey conducted during one week of the month, the nation's economy produced 138,000 new jobs during May. That was far below the consensus expectation of 225,000 new jobs expected by Wall Street economists.

But the Bureau of Labor Statistics also made large revisions in data from previous months, including a sharp upward revision for April, that significantly clouded the picture.

Moreover, the unemployment rate, reported on the basis of a separate survey, unexpectedly dropped to 4.8% from 4.9% in April. Economists had anticipated a upward tick in the rate to 5%.

But this is the last jobs report to be issued before the Federal Reserve's monetary policymakers convene again in Washington, on July 1-2, to appraise business conditions and again ponder raising short-term interest rates.

Given the falling unemployment rate, Mr. Steinberg and other economists expect the Fed to tighten credit in July. Indeed, many on Wall Street were surprised when the central bank did not act in May to follow up its move on March 25-when it nudged up the federal funds rate to 5.5% from 5.25%.

As it does annually, the May jobs report featured "benchmark revisions" to the employment data released by the Labor Department. Under the changes, the economy actually added 30,000 fewer jobs per month during the first quarter than previously thought-207,000 monthly on average.

On the other hand, job gains in March and April were revised higher, meaning that job gains averaged 214,000 monthly over the past three months.

Mr. Steinberg thinks recent job growth is "consistent with a stable unemployment rate" and that the next Fed rate increase will be its last for this business cycle.

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