* U.S. unit labor costs jump in Q1

* U.S. 10-year hits more than one-week low

* U.S. yield curve narrows inversion

* Focus on U.S. nonfarm payrolls for April

NEW YORK, May 2 (Reuters) - U.S. Treasury yields slipped on Thursday, with investors continuing to digest the Federal Reserve's less-than-hawkish stance after Wednesday's policy meeting that suggested interest rate cuts were very much on the table even though inflation remained stubbornly above the 2% target.

Earlier in the session, U.S. yields rose due to stronger-than-expected labor market data that reinforced the view that the Fed will delay cutting interest rates to later this year.

In afternoon trading, the benchmark 10-year yield slid to a more than one-week low of 4.567%. It was last down 1.4 basis points (bps) at 4.576%.

The yield on the 30-year Treasury bond was slightly up at 4.725%.

On the shorter end of the curve, the two-year Treasury yield, which typically reflects interest rate moves, was down 5.8 bps at 4.881%.

Treasury yields got an initial boost after a report showed unit U.S. labor costs - the price of labor per single unit of output - jumped to a 4.7% rate in the fist quarter after being unchanged in the previous three months. Labor costs increased at a 1.8% pace from a year ago.

Those moves have now faded in the afternoon as investors braced for Friday's U.S. nonfarm payrolls report for April. The forecast is 243,000 new jobs, down from 303,000 the previous month, but a still-lofty number. The rise in average earnings is expected at 0.3%, unchanged from the previous month, according to a Reuters poll.

"Markets have returned to digesting what happened yesterday with the Fed and the refunding announcement," said Will Compernolle, macro strategist at FHN Financial in New York, referring to the quarterly outlook by the U.S. Treasury for debt issuance in the May to July period.

"A lot of the rally today (yields lower) was driven by essentially eliminating the possibility of a rate hike. The Fed's reaction function to higher inflation is going to be extend the pause longer than consider a hike."

The Fed on Wednesday kept interest rates steady, but noted that it does not expect to cut them any time soon until it has gained greater confidence that inflation is moving sustainably toward its 2% target.

Fed Chair Jerome Powell was also less hawkish, echoing the central bank statement that kept the fed funds rate at the 5.25% to 5.50 range.

"Certainly, the labor market and inflation data have not only provided the Fed with no urgency to consider easing monetary policy anytime soon, but they have also called into question whether any rate cuts are needed at all," wrote Kevin Flanagan, head of fixed income strategy at WisdomTree in his latest blog.

"As a result, the voting members apparently believe they can just sit back and be patient. Looking ahead, though, you get the sense that Chairman Powell is itching to cut rates, but the data needs to lead him there."

The U.S. yield curve, meanwhile, steepened or narrowed its inversion. The spread between U.S. two- and 10-year yields was minus 30.8 bps, from minus 33.6 bps late on Wednesday.

This curve, effectively a "bull steepener," shows a scenario in which short-term interest rates are falling faster than the long-dated ones. This suggests that the Fed's next move is to lower interest rates.

Post-data and after Powell's press briefing on Wednesday, U.S. rate futures have priced in a 68% chance of a rate cut in November, rising to 80% in December, according to CME's FedWatch tool.

The rate futures market has also priced in just one rate cut of 25 bps this year, from as much as six at the beginning of 2024.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Will Dunham and Jonathan Oatis)