Nonfarm payrolls forecast to increase by 250,000 in July
Unemployment rate seen unchanged at 3.6
Average hourly earnings expected to rise 0.3

WASHINGTON, Aug 5 Reuters U.S. job growth likely slowed in July, but the pace was probably strong enough to keep the unemployment rate at 3.6 for a fifth straight month, offering the strongest evidence yet that the economy was not in recession.

The Labor Department39;s closely watched employment report on Friday is expected to paint a picture of an economy muddling through despite backtoback quarters of contraction in gross domestic product, the broadest measure of U.S. economic activity. Though demand for labor has eased in sectors like housing and retail that are sensitive to the higher interest rates being engineered by the Federal Reserve in its battle against inflation, industries like airlines and restaurants cannot find enough workers.

The labor market is no longer tinder box hot, said Sung Won Sohn, professor of finance and economics at Loyola Marymount University in Los Angeles. But it remains pretty healthy and does not meet the National Bureau of Economic Research39;s broad definition of a contraction in the economy.

The NBER, the official arbiter of recessions in the United States defines a recession as a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators.

Still, government data last…