Hiring surged this spring, the latest sign the U.S. economy maintains momentum in the face of rising interest rates and complicating the Federal Reserve’s decision over whether to pause rate increases this month. U.S. employers added a seasonally adjusted 339,000 jobs in May and the prior two months’ payrolls were revised up by nearly 100,000, the Labor Department said Friday. Workers gained more than 1.5 million jobs in 2023, more evidence of economic vitality, including robust consumer spending and a stabilizing housing market. The latest data does little to settle the Fed’s debate over whether to hold rates steady at a meeting this month, but does suggest that if officials do so, they could favor raising rates later this summer.

The U.S. unemployment rate rose to 3.7% in May, still near historic lows but an uptick from April’s 3.4%, the Labor Department said. Average hourly earnings grew a solid 4.3% in May over the prior year, similar to annual gains in March and April.

Even with the spring hiring jump, there were some underlying signs of weakness in the report. Unemployment rates rose for women and Black Americans, both groups that had seen joblessness fall over the past few years.

The labor-force participation rate, the share of Americans who are working or actively seeking jobs, remained flat in May at 62.6% and below the February 2020 prepandemic level of 63.3%. That partly reflects the aging U.S. population. Among workers age 25 to 54, the participation rate rose to 83.4%, a level last touched in 2007.

More From The Wall Street Journal (subscription required):