The U.S. added 172,000 jobs in May, far exceeding expectations of 85,000. The unemployment rate held steady at 4.3%, according to the Labor Department.
Job gains were concentrated in leisure and hospitality, local government, and health care. Average hourly earnings rose 0.3%.
Analysts had expected a significantly weaker report. Stock futures were little changed after the release.
The strong job data complicates the Federal Reserve's next move. With inflation still elevated, traders now see a 38.5% chance of a rate hike by year-end, and just a 2% chance of a cut.
Some economists expect the Fed to signal a potential rate increase at its June 17 meeting. The key signal will be whether the central bank lists inflation before labor market conditions in its policy statement.
Consumer sentiment remains low despite stable employment and rising wages. Americans continue to spend even as inflation persists.