By Jason Lange

WASHINGTON (Reuters) - Job growth probably picked up only slightly in May, suggesting the economy is still in a rut and not ready for the Federal Reserve to dial back its monetary support.

Employment outside the farming sector likely increased by a lackluster 170,000 jobs, according to a Reuters survey of economists. That would be just above the 165,000 created in April.

The report would be the latest to suggest tax hikes and government spending cuts will weigh on the economy throughout the first half of the year, although not enough to derail the recovery from the 2007-09 recession.

"There will be more slip-sliding through the soft patch," said Vincent Reinhart, an economist at Morgan Stanley in New York.

The Labor Department will release the May employment report on Friday at 8:30 a.m. EDT.

Comments by U.S. central bankers in recent weeks have fueled speculation the Fed could be just a few months away from tapering a bond-buying program intended to keep interest rates low and boost employment.

The remarks caught investors by surprise because job growth has been rather modest in three of the last four months. Another month of slow hiring could leave investors more confident that the Fed won't start easing its foot off the accelerator until at least very late in the year.

"It would likely diminish tapering ideas," Brown Brothers Harriman said in a research note.

Slow-but-steady hiring is seen anchoring a return to stronger economic growth later in the year as the drag from government austerity fades. In the meantime, however, consumer spending is suffering; it fell in April for the first time in almost a year.

The forecast job gains should be just enough to hold the unemployment rate at 7.5 percent, its lowest since December 2008.

Fed officials next meet June 18-19 and are widely expected to keep purchasing $85 billion in bonds a month to press borrowing costs lower and spur a stronger recovery. Reinhart said job growth would probably not be strong enough for the Fed to begin scaling back its bond purchases before December.

SLUGGISH GROWTH

After barely growing in the last three months of 2012, the U.S. economy expanded at a moderate 2.4 percent annual rate in the first quarter. But it appeared to lose momentum as the quarter drew to a close.

U.S. factories are feeling the pinch from Europe's debt crisis, which has sent a chill over the global economy. The Institute for Supply Management said on Tuesday that U.S. manufacturing activity contracted in May. Manufacturing employment in seen rising by a meager 3,000 jobs last month.

Government payrolls are expected to have dropped by about 10,000 in May. Budget cuts have led to hiring freezes in many government agencies, and attrition could be slowly reducing government payrolls.

The employment report is expected to show average hourly earnings rose by 0.2 percent, while the length of the average workweek is expected to rise to 34.5 hours.

(Reporting by Jason Lange; Editing by James Dalgleish)

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