The nation's employers stepped up their hiring in May, adding a robust 339,000 jobs, well above expectations and evidence of strength in an economy that the Federal Reserve is desperately trying to cool.

Friday's report from the government showed that the unemployment rate rose to 3.7%, from a five-decade low of 3.4% in April.

The stronger hiring demonstrates the job market's resilience after more than a year of rapid interest rate increases by the Fed. Many industries, from construction to restaurants to health care, are still adding jobs to keep up with consumer demand and restore their workforces to pre-pandemic levels.

Having imposed 10 straight rate hikes since March 2022, the Federal Reserve is widely expected to skip a rate increase when it meets later this month, though it may resume its hikes after that. Chair Jerome Powell and other Fed officials have made clear that they regard strong hiring as likely to keep inflation persistently high because employers tend to sharply raise pay in a tight job market. Many of these companies then pass on their higher wage costs to customers in the form of higher prices.

In a statement, President Joe Biden said that "today is a good day" for America's economy and workers.

"We have now created over 13 million jobs since I took office," the president said. "That is more jobs in 28 months than any President has created in an entire 4-year term."

"We also learned that the unemployment rate has been under 4 percent for 16 months in a row," Biden continued. "The last time our nation had such a long stretch of low unemployment was in the 1960s. And the share of working age Americans in the workforce is at its highest level in 16 years. Meanwhile the annual inflation rate has fallen for 10 months in a row, and it’s down more than 40 percent since last summer. During that time, take-home pay for workers has gone up, even after accounting for inflation."

Biden went on to say that May's jobs figures show that his economic plan is working, and touted the bipartisan budget agreement that lawmakers passed Thursday night to raise the debt limit, which he was set to sign into law Friday.

"The agreement protects our historic and hard-earned economic recovery, and all the progress that American workers have made in the last two years," Biden said of the debt limit deal. "And it protects key priorities and accomplishments from the last two years."

"Our work is far from finished, but this agreement is a reminder of what’s possible when we act in the best interests of our country," he concluded.

The May jobs report adds to other recent evidence that the economy is still managing to chug ahead despite long-standing predictions that a recession was near. Consumers ramped up their spending in April, even after adjusting for inflation, and sales of new homes rose despite higher mortgage rates.

Bharat Ramamurti, President Biden's deputy director of the the National Economic Council, told Spectrum News that the outlook for the U.S. economy is "very strong."

"We avoided what will be very severe economic consequences from a debt default," Ramamurti said, adding: "Part of that deal was also able to protect core elements of his agenda from the last few years a lot of investment incentives that will allow hundreds of billions of dollars worth of private investment in American manufacturing, American production" and other areas.

"All of that is, in many ways, still about to hit the economy," he continued. "The combination of ... continued job growth, wages moving in the right direction, inflation trending down, new private investment dollars coming, I think the outlook for the economy is very strong.

Some cracks in the economy's foundations, though, have begun to emerge. Home sales have tumbled. A measure of factory activity indicated that it has contracted for seven straight months.

And consumers are showing signs of straining to keep up with higher prices. The proportion of Americans who are struggling to stay current on their credit card and auto loan debt rose in the first three months of this year, according to the Federal Reserve Bank of New York.

Chris Kayes, a professor of management at George Washington University, told Spectrum News that while "there's a lot of good news when we look at the economy today," inflationary pressures are still impacting millions of Americans.

"We're probably going to be looking at higher interest rates for a period of time, and maybe even higher interest rates as we move into the summer," Kayes said. "If you're looking to buy a house or a car or taking out a loan, you're going to be paying more on interest. However, if you're a saver, or you're a retired person, and you want to get more income from your investments, then this is probably a good sign for you."

Fed officials are expected to forgo a rate increase at their June 13-14 meeting to allow time to assess how their previous rate hikes have affected the inflation pressures underlying the economy. Higher rates typically take time to affect growth and hiring. The Fed wants to avoid raising its key rate to the point where it would slow borrowing and spending so much as to cause a deep recession.

"I anticipate that we're going to see either steady interest rates or something even higher in the summer, and maybe even into the fall," Kayes predicted. "The Federal Reserve has been trying to get unemployment up. They're trying to get fewer jobs out there, because it's a very hot labor economy right now, and they're thinking that this would bring down inflation, but they're just not seeing that trend."

"We are happy to see that the economy is well-positioned to deal with whatever headwinds it has to deal with," Ramamurti said. "If if there are further interest rate increases, the economy, the American consumer, American businesses seem well-positioned to have to to deal with that."

The U.S. economy as a whole has been gradually weakening. It grew at a lackluster 1.3% annual rate from January through March, after 2.6% annual growth from October through December and 3.2% from July through September.

The Federal Reserve's so-called Beige Book, a collection of anecdotal reports mostly from businesses across the country, reported this week that the pace of hiring gains in April and May had "cooled some" compared with previous reports. Many companies reported that they were fully staffed.

At the same time, despite some high-profile job cuts by financial and high-technology companies, the pace of layoffs remains unusually low. The number of people seeking first-time unemployment benefits, a proxy for layoffs, barely rose from a low level last week.

"Even though we're seeing layoffs increase, they're not increasing at a rate that is affecting the economy," Kayes said. "At the same time, fewer people are quitting their jobs. So what this maybe means is that people are looking at the headlines and they're a little bit more reluctant to leave jobs than they were before."

"If we look at situations like the Hollywood writers strike, and we look at Amazon, who employees recently announced that they're going to do a company wide strike across the country ... what we're seeing is that employees, even though they're not quitting their jobs at the same rate, they're still very dissatisfied with the jobs that they have," he continued. "So they're still wanting to take action to get a better employment situation."

Many employers are still engaged in so-called "catch-up hiring," particularly in such sectors as restaurants, hotels and entertainment venues. Even as customer demand in these industries has spiked, the number of employed workers remains below pre-pandemic levels.

Consumers, who drive roughly two-thirds of economic activity, are still mostly spending at a solid pace, despite higher prices and borrowing rates. Their spending jumped 0.8% in April, the fastest monthly pace since January, as Americans flocked to airports, restaurants and concert halls, among other places.