Bank stock investors remained uneasy despite a report on Friday that the growth of new jobs slowed in May, a development that may cut chances the Federal Reserve will raise interest rates soon.

The Labor Department reported only 11,000 people added to payrolls last month, the least for any month in three years and far fewer than economists had expected.

After a Conference Board report that the index of leading economic indicators fell 0.1% in April, and signs that the housing sector has been hurt by higher mortgage rates, some saw the payroll report as confirmation that the nation's robust economy is cooling.

But bank stocks barely budged on the news, winding up another slack week. And they could remain in the doldrums for another week, as investors await the release of the consumer price index June 18.

Other recent data raise doubts about an economic slowdown, economists said. For instance, the Labor Department said Friday that the unemployment rate, calculated separately from payrolls, edged down to 4.2% in May, staying near a 30-year low. And inflation-wary bond investors were troubled by a 0.4% rise in hourly wages.

Banks and other interest-sensitive financial sector stocks have suffered since the last price report in mid-May, which showed a sizable 0.7% rise in inflation during April, including a 15% leap in gasoline prices. One Fed policymaker termed the report "troubling."

May's inflation reading "will be decisive" for the central bank, said Bruce Steinberg, chief economist at Merrill Lynch & Co.

"If the core CPI rises 0.1% for May, as we expect, the Fed will probably remain on hold," he told clients Friday. "But if it rises 0.3% or more, the Fed will probably tighten."

Meanwhile, job growth is clearly slowing, the economist said. "Payroll gains averaged 196,000 per month during the first five months of 1999," he said, "compared with about 240,000 per month during 1998 and 280,000 per month during 1997."

Job growth "is coming into line with underlying population growth," Mr. Steinberg said. So far this year, the economy has gained 981,000 jobs, versus 2.9 million for all of 1998 and 3.4 million in 1997.

Is the long-anticipated economic cooldown indeed under way? Some say so, noting the delayed impact of higher rates since early spring. Other factors may also be at work.

"We don't expect the second and succeeding quarters to be as robust as the first quarter," said economist and money manager A. Gary Shilling in a recent assessment.

"For one, lots of tax refunds were paid-and spent-in the first quarter, while in the second, big tax payments were made as April 15 rolled around," said Mr. Shilling, who heads his own firm in Springfield, N.J.

Meanwhile, "housing construction benefited from the mild winter, but this increased activity meant that construction was started earlier than normal or, in effect, 'borrowed' from the second and succeeding quarters." he said.

Finally, airline passenger traffic, a sensitive indicator of business sentiment and economic activity, decreased in April.

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