After an apparent soft landing this summer, the U.S. economy now appears balanced precariously between fresh growth and the prospect of stagnation or even recession.

Market interest rates rose Friday morning on release of an unexpectedly strong employment report. Then they plummeted on a report indicating unexpected weakness in the manufacturing sector.

The Department of Labor disclosed that nonfarm payrolls rose by 249,000 last month, much more than the 156,000 expected by Wall Street.

On the other hand, the closely watched index of the National Association of Purchasing Managers slipped to 46.9 from 50.5 in the prior month. A reading below 50 predicts a decline in manufacturing.

In the wake of the conflicting data, economists offered sharply differing views of future business conditions and what the Federal Reserve may do next about rates.

Some think the economy is regaining momentum on its own after a dip in late spring and needs no help from the central bank.

"If you were Rip Van Winkle, awakening with no idea what has gone on, you would say we are recovering from recession," said Gary L. Ciminero, chief economist at Fleet Financial Group Inc., Providence, R.I. "Instead, it was a soft landing."

Soft landings occur when the Fed manages to rein in economic growth without triggering a recession and prolongs the expansionary phase of the business cycle. The phenomenon is the subject of much debate among economists.

Mr. Ciminero called the employment report "unambiguously strong." He added that while the purchasing managers index "bears watching" in future months, its decline may have been prompted "more by statistical weakness than actual weakness."

The Fleet economist now expects the Fed to "sit pat for the rest of the year" on interest rates. The need to coordinate "dollar policy" among the world's central banks will bolster that position, he said.

Anthony Karydakis, chief financial economist at First Chicago Corp., said the economy appears to be headed for "a reasonable rate of growth in the third quarter and doesn't need any help from the Fed."

He said recent data almost surely rule out any shift in rates when the Fed's policy-making open marketing committee meets again later this month.

Whether the Fed will slice rates again this year, following its move in July, will largely depend on the government budgetary debate in Congress this fall, Mr. Karydakis said.

At least one economist sees a chance that the next monetary policy move by the Fed could a tightening of credit.

Eugene J. Sherman, director of research at M.A. Schapiro & Co., New York, expects economic growth to accelerate to around a 3.5% annual rate, which could provoke the central bank to tighten credit in late January or early February. He said, however, that the economy will grow at an annual rate of 2.5% in the third quarter, which is precisely the central bank's target.

For now, "I think the Fed does nothing," he said. "They have things right where they want them. I don't think they can fine-tune it any better."

But several economists have a far different view of what the future holds.

"If you look beneath the payroll report, it is kind of like looking into a watermelon that isn't all that ripe," said Sung Won Sohn, chief economist at Norwest Corp., Minneapolis.

He noted that manufacturing employment, after falling 88,000 in July, improved by only 12,000 in August. Also, the average of weekly working hours declined to 34.4 from 34.6, he noted.

"I think we will see economic growth below 2.5%" again this year, he said, an event that could prompt the Fed to cut rates. The economy grew at a modest 1.1% annual rate during the second quarter this year, which preceded the Fed's rate cut in July.

Lacy H. Hunt, chief economist at HSBC Securities Inc., New York, thinks that rather than being in recovery, the present economy is "very frail and struggling hard." The forward-looking indicators such as the National Association of Purchasing Managers index are "very troubling," he said.

He thinks the Fed should cut rates soon to protect the economy from sliding toward recession. 'We are in need of a more stimulative monetary policy," Mr. Hunt said. "And it would be tragic if we don't get it."

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