US companies hired nearly a million new workers in May, according to a report.

Private payrolls increased by 978,000 jobs last month – the biggest increase since June last year and well above the revised total for April of 654,000.

It comes as the US economy continues to reopen, thanks to a largely successful COVID-19 vaccination programme allowing life to get closer to normal again.

The releasing of pent-up demand, however, is contributing to shortages in workers and raw materials, creating a drag on recovery.

The ADP National Employment Report is developed with Moody’s Analytics and comes ahead of the US Labor Department’s more comprehensive analysis, which is due on Friday.

It uses different methodology and has not always correctly predicted private payrolls, having over-estimated the count for April, and under-stated growth for some of the past year.

Economists are, therefore, cautious about using it as a predictor for the government report.

A Reuters survey of economists concluded that private payrolls likely increased by 600,000 jobs in May, having risen only 218,000 in April.

Government hiring is expected to have added around 50,000, meaning that May’s overall payroll growth would be around 650,000.

Official data shows that employers have added 1.8 million jobs this year – an average of more than 450,000 a month – but the economy is still down by 8.2 million jobs from its February 2020 level.

Also on Thursday, the Labor Department said that the number of Americans claiming unemployment benefits fell last week to a new pandemic low.

It was the fifth consecutive weekly decline and is being seen as evidence that the job market is returning to full health.

Jobless claims dropped to 385,000 – down 20,000 from the week before, although this number remains high by historical standards.

At least 25 states plan to cut some of their emergency federal unemployment aid, with critics having argued that the aid – on top of state jobless benefits – discouraged some people from looking for work.

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