As if last week's decline in bank stocks were not enough, fresh evidence released Friday by the government complicates the economic outlook and is likely to create more slippage in financial company share prices.

The Labor Department reported that 310,000 jobs were created in July and that hourly earnings advanced by 6 cents.

With both indicators above expectations, pointing to a possible emergence of inflation, most economists are convinced the Federal Reserve will decide to raise interest rates by a quarter of a percentage point at its next monetary policy meeting on Aug. 24. The central bank last raised rates on June 30, the first time it did so in two years.

"There is no evidence thus far pointing to a real slowing in the economy," said Ian Shepherdson of High Frequency Economics in Valhalla, N.Y. He suggested a rate increase could be justified.

Some economists are uncomfortable about the prospects of a rate increase because they suspect the economy may already be slowing. Yet they acknowledge they have little evidence to prove it.

"The pace of job growth is unacceptable to the Fed," said Bruce Steinberg, chief economist at Merrill Lynch & Co., who thinks a slowdown is under way even though it is not yet perceptible.

If further Fed action after the expected August increase is to be avoided, "job growth must slow," he said.

"Domestic demand grew at a more than 5% rate during the first half, with consumer spending, capital spending, and residential construction all very strong," Mr. Steinberg said. "We believe each of those sectors is moderating to varying degrees, with the sharpest slowdown in home building activity."

Edward Yardeni, chief economist at Deutsche Bank Securities in New York, is convinced the Fed will raise rates this month and he questions whether inflation is a real problem. He described the latest fears about labor-cost pressures as "much ado about very little inflation."

He said much of the quarterly rise in the employment cost index stemmed from a "sharp upswing" in the finance, insurance, and real estate sectors, where labor costs are volatile. Across the entire economy, "labor-cost pressures in these sectors are least likely to get pushed through to prices," he said.

Mr. Yardeni also pointed out that inflation remains subdued globally.

At 3.1%, the inflation rate is at three-decade lows in the United States and other industrialized countries that make up the Organization for Economic Cooperation and Development. The rate is 1% in the European Union and may fall below zero next year.

In Japan and elsewhere in Asia, deflation is prevalent. In South America, recession has tamed cost pressures. Brazil, once known for hyperinflation, now has 3% annual inflation.

"After temporary factors pushed up U.S. consumer prices in April, prices were flat in May and June-the tamest in over a decade," Mr. Yardeni said. The nation's inflation rate is "heading back below 2%," with core inflation, excluding volatile energy and food prices, up at only a 1.6% annual rate during the first half of the year.

Bank stocks reacted strongly on Friday after the government numbers were released. With one or two exceptions, stocks of all large- and mid- capitalization banks declined, with the Standard & Poor's bank stock index down 2.5%.

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