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ECONOMY AND INFLATION SLOWING

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Unemployment is creeping higher, consumer spending has slipped and manufacturing may have stalled, the government reported Friday. Wall Street roared with approval.

Investors, who had been on edge for weeks, read the reports as confirming earlier data suggesting the economy was slowing in healthy fashion and there would be no imminent interest rate increase to keep inflation in check.Bond prices rose immediately after the Labor Department reported that the jobless rate had inched up to 5.4 percent from June's 5.3 percent and that job creation had slowed for a second straight month.

The Dow Jones industrial average rose 85.08 points to 5,679.83. The barometer of 30 big U.S. companies has now snapped back by nearly 500 points from the depths of the market's steep selloff last month.

Broader stock market measures were higher, too, including the second biggest point-gain in the the technology-laden Nasdaq composite index.

The employment report "shows strength but not too much strength. It shuts the door on any near-term tightening" through higher interest rates, said Robert G. Dederick, economic consultant for Northern Trust Co. in Chicago.

The Clinton administration also welcomed the figures.

"It's a report that provides assurances both to Main Street and to Wall Street," Labor Secretary Robert Reich said in an interview. "Job growth continues to be robust, but . . . we see no sign of the labor market tightening enough to spur inflation."

But presumptive Republican presidential candidate Bob Dole focused on a dip in hourly earnings, saying, "The economy may look rosy from the White House Rose Garden, but for the average worker, the picture just got a little bleaker."

Federal Reserve Chairman Alan Greenspan told Congress last month the central bank stood ready to boost interest rates absent any evidence the economy was slowing on its own.

The employment report was the latest of a rash of figures since then, including falling retail and home sales, suggesting economic growth was tapering off to a more sustainable pace.

It showed the jobless rate edging up from June, when it had dipped to the lowest level since a 5.2 percent rate in June 1990. It was the 22nd month in which the rate remained in the mid-5 percent range.

About 193,000 jobs were created in July, at least 10,000 of them attributed to the Olympics. Job growth had averaged 273,000 a month during the April-June quarter.

The report also eased concerns that wage pressures might boost consumer prices. The average hourly wage fell 2 cents to $11.80 after spiking up 8 cents a month earlier.

Labor costs can represent two-thirds of a product's price.

In a separate report, the Commerce Department said consumer spending dipped 0.2 percent in June, the first drop since January when blizzards kept many shoppers in their homes.

Consumer spending represents about two-thirds of the nation's economic activity and helped propel the economy at a torrid 4.2 percent annual rate between April and June.

The decline occurred despite a 0.9 percent jump in personal income, the largest in a year and a half. Many analysts believe it marks an end to a spending spree by consumers who now find themselves shouldering a pile of debt.