The country got a double measure of good economic news yesterday: the unemployment rate fell from 7 per cent to 6.9 per cent in May and the recent surge in inflation slowed markedly.

The Labor Department reported that on the strength of the third consecutive month of big gains in employment, the unemployment rate fell below 7 per cent for the first time in 2 1/2 years.

The department also said that the wholesale price index, which had been raging at a 13.1 per cent annual pace during the prior three months, rose only 0.4 per cent in May, a 4.9 per cent annual rate when compounded.

Most of the slowdown in the wholesale price index was due to a 2.3 per cent drop in farm prices. Farm prices had been soaring at a double-digit rate in each of the five preceding months including December, and in April alone rose 3.4 per cent.

The cost of energy, the other major culprit in the recent spate of inflation, continued to rise rapidly for the fourth month in a row, the Labor Department said.

But all industrial prices, which include energy costs, rose only 0.4 per cent in May, down from 0.6 per cent in April and 0.8 per cent in March. Because industrial price changes are more likely to stick than farm prices, economists look more carefully at the industrial price index.

The Carter administration took the good news with a measure of reserve.

White House press secretary Jody Powell called the unemployment report and the wholesale price index "encouraging," but said they "should not be viewed as a dramatic move."

Powell told reporters that while the 0.4 per cent rise in the wholesale price index, a precursor of prices consumers eventually pay, was a moderate one, "it should not be looked on as an improvement in the fundamental rate of inflation."

Administration officials say that the underlying rate of inflation is between 6 and 6.5 per cent. Prices, as measured by the consumer price index, rose only 4.8 per cent in 1976.

Julius Shiskin, commissioner of labor statistics, was also cautious about the apparent slowdown in inflation. Testifying before the congressional Joint Economic Committee, Shiskin said "these May improvements in prices should be interpreted with caution since they represent only a one-month trend."

The improvement in the unemployment picture, however, is a continuation of a trend begun last November, when the unemployment rate was 8 per cent. Since last October nearly 2.7 million people have found jobs. Last month alone 385,000 people found work.

But because nearly the same number of Americans began looking for a job, there was only a small decline in the unemployment rate.

The unemployment rate is the percentage of the labor force that is out of work and actively seeking a job. The labor force is the sum of the unemployed - 6.75 million in May - and the employed. The Labor Department said 90.4 million people had jobs last month.

The unemployment rate is based on a monthly survey of 47,000 households. Another survey of employer payrolls is considered more reliable, although less comprehensive, than the household survey.

The government said that nonfarm payrolls rose by 185,000 in May to 81.8 million. Manufacturing continued to pace the current expansion and over the past seven months" has accounted for 600,000 of 2 million new payroll jobs.

There have also been sizable gains in the construction industry. Both manufacturing and construction had been slow to rehire during late 1975 and 1976, during the early part of the recovery from the 1974-75 recession.

Charles L. Schultze, chairman of the President's Council of Economic Advisers, has said that the large increase in production in the economy in the first part of the year will not be quite as marked in the final six months.

But Schultze has said the administration still expects the unemployment rate to be as low as 6.6 per cent by the end of the year. Initially, President Carter said he hoped to get unemployment down to 7 per cent by the end of 1977.

The unemployment rate for teenagers and blacks remained much higher than the overall rate. Black unemployment was 12.9 per cent, teenage unemployment was 17.9 per cent and Black teenagers had an unemployment rate of 38.7 per cent in May.

Adult men had an unemployment rate of 5.3 per cent, up from 5 per cent in April, while adult women had a 6.6 per cent rate, down from 7 per cent. Shiskin said he attributed little significance to the increase in adult men's or the decrease in adult women's unemployment.

The Labor Department said that most farm product prices declined in May, including eggs, green coffee, cocoa, tea, soybeans, poultry and fresh vegetables. Liverstock prices rose.

Processed foods and feeds rose 1.8 percent in May. The labour Department used roasted coffee, beef, veal and pork among processed foods whose price rose.

The was a large 1.4 per cent increase in fuel prices and a 0.8 per cent rise in chemical prices among industrial commodities.

Shiskin told the Joint Economic Committee that after food and fuel prices are factored out of the wholesale price index, it rose 0.3 per cent.

The wholesale price index itself stood at 195.2 per cent of its 1967 average, which means that a selection of goods that cost businessmen $100 in 1967 cost them $195.20 last month.