American employers added 390,000 jobs last month, the government reported on Friday, a sign of a slowdown in hiring but still a better-than-expected result amid a shortage of workers.

The jobless rate held steady at 3.6 per cent for the third consecutive month, just a tenth of a point above the pre-pandemic level in February 2020, the Labour Department said.

Restaurants and hotels that were decimated due to COVID-19 showed a strong recovery in May, adding 84,000 positions, the data showed. The sector is still down 1.3 million jobs compared to the pre-pandemic level.

Employers have struggled to fill open positions, which has pushed wages higher, and average hourly earnings rose another ten cents compared to April, to $31.95.

The pay rate is 5.2 per cent higher than May 2021, but that is slightly slower than the increase posted in the prior month, the report said. That could be good news for the Federal Reserve, which has launched an aggressive campaign to raise interest rates to combat the highest US inflation in more than 40 years.

The pay rate is 5.2% higher than May 2021, but that is slightly slower than the increase posted in the prior month

The labour force participation rate edged up very slightly to 62.3 per cent, a sign more workers could be coming off the sidelines to rejoin the labour force, which would ease pressure on wages.