Employers in the US increased hiring in May as the fading epidemic, aided by vaccines, drew more individuals back into the workforce, providing comfort that the economy's rebound from the COVID-19 downturn was on track.

Nonfarm payrolls climbed by 559,000 jobs last month, as per the Labor Department's widely watched employment data released on Friday. Payrolls increased by 278,000 in April, up from 266,000 originally reported, according to updated data.

Reuters conducted a poll for economists, who predicted 650,000 new jobs in May. The jobless rate dropped to 5.8% in May, down from 6.1% in April.

People who misinterpret themselves as “employed but away from work” have caused the unemployment rate to be overstated.

The initial employment count in April, which generated approximately a quarter of the additional jobs predicted by experts, prompted some economists and investors to worry that development was slowing at a time when inflation was increasing.

The economy is benefiting from improved public health and huge fiscal stimulus. According to data from the US Centers for Disease Control and Prevention, at least half of the American population has been completely immunized against COVID-19.

As a result, officials throughout the country have been able to ease virus-related restrictions on enterprises, which virtually immobilized the economy initially in the pandemic.

However, the reopening of the economy is putting pressure on the supply system.

A staff scarcity attributed to childcare issues, hefty unemployment benefits, and persistent COVID-19 concerns hampered recruitment. There are 8.1 million job opportunities, a record number.

Millions of employees, primarily women, continue to work from home since most school districts have not transitioned to full-time in-person education.

Although vaccinations are readily available, some parts of the population are hesitant to become immunized, which labor market specialists believe discourages some individuals from going back to work.

Government-funded benefits, such as a $300 weekly jobless payment, are also putting a damper on recruiting. Beginning next Saturday, Republican governors in 25 states will discontinue this aid and other federally sponsored jobless initiatives for citizens.

These states employ more than 40% of the population. The increased benefits will be phased down across the country in early September. This, together with more people being immunized and schools completely starting in the autumn, is projected to alleviate the labor shortage by September.

Becky Frankiewicz, head of Manpower Group's North American division, said that most of the firm's clients are increasing salaries and perks to attract more applications. Some of these businesses, notably those in manufacturing and warehousing, are indeed experimenting with alternative strategies, like paying their employees weekly or daily, instead of every two weeks. Manpower also encourages its clients to make employment offers the same day as an interview instead of waiting.

According to Frankiewicz, over 60% of Manpower's contractual placements leave their employment before their contractual assignment finishes, primarily because they receive good offers.

“People have choices,” she explained. “Companies must provide quickness in cash, rapidity in hiring, and a great deal of versatility with how they work.”

There are indications that most of the unemployed are still wary of looking for a job.

On a conference call with investors on Thursday, Tony Sarsam, CEO of SpartanNash, a food distributor and retailer, revealed that the firm participated in a job fair last month with 60 firms that had 500 openings to fill.

Sarsam stated, "Only four aspirants came up."

On Friday, US stocks gained, led by technology firms, as weaker-than-expected employment growth eased fears about the economy operating too hot and forcing a premature tightening of monetary policy.

“The employment data has helped to alleviate investor worries over inflation anxieties,” said Josh Wein, portfolio manager at Hennessy Funds.

New orders for US-made goods decreased more than anticipated in April, as a worldwide semiconductor shortage impacted the manufacturing of motor vehicles, electrical equipment, appliances, and components.

The Commerce Department reported on Friday that manufacturing orders fell 0.6% in April after climbing 1.4% in March. Reuters surveyed economists predicted a 0.2% decline in manufacturing orders. Year on year, orders increased 14.2%.

Manufacturing, which contributes for 11.9 % of the US GDP, is benefiting from a change in demand away from services during the epidemic. However, high demand is placing pressure on supply networks.