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Hiring in the US surged unexpectedly last month, continuing to defy predictions of a slowdown while raising fresh questions about when interest rates will fall.

Employers added 272,000 jobs in May, the US Labor Department said, above expectations of 185,000 new roles.

The larger-than-expected gain emerged despite the highest borrowing costs in more than 20 years, which analysts have been expecting to weigh on the economy.

The US central bank has raised interest rates sharply since 2022 to fight inflation, which measures the pace of price rises. The Fed has cited the strength in employment as a sign that the economy can handle the current rates.

The latest job figures undermine other data suggesting signs of softening and will bolster the case that talk of cutting borrowing costs is premature, analysts said.

"Today's data suggests the Fed is going to have to sit tight and wait a while longer before that first cut can be considered," said Richard Carter, head of fixed interest research at Quilter Cheviot, the investment management firm.

He added that the figures had the potential to take any move this year "off the table".

The European Central Bank and Bank of Canada announced rate cuts this week, part of a global shift to lower borrowing costs as the shock of inflation exacerbated by Russia's invasion of Ukraine starts to fade.

But in the US the Federal Reserve has said it wants more confidence that high borrowing costs are working to slow the economy and help ease pressures pushing up prices.

Inflation in the US has come down sharply since 2022, but progress appears to have stalled in recent months. The most recent reading put inflation at 3.4% in April, compared with the Fed's 2% target.

Analysts said wage gains reported on Friday were likely to add to concerns that inflation may not return to the 2% target as quickly as hoped.

The Labor Department said average hourly pay increased 0.4% from April to May, the pace picking up again after several months of slowing.

Over the last 12 months, wages are up 4.1%, it said. Economists had expected a 3.9% increase.

While good news for workers, analysts said the figures were likely to give the Fed pause as it debates whether to reduce borrowing costs. It is looking to balance getting inflation under control with the risk that leaving interest rates too high for too long could trigger a more severe slowdown in economic growth.

"This report means the Fed will leave interest rates at their current high level for a few more months yet," said Ian Shepherdson of Pantheon Macroeconomics.

But he said that he still expected some weakening in the coming months, noting that the jobless rate, which is calculated using a different survey from the jobs figures, ticked up to 4%, from 3.9% in April.

Mr Shepherdson said he expected the Fed to cut rates in September, and make even more aggressive reductions in the months after.

"When the labor market turns, the Fed will be quickly left looking excessively cautious and short-sighted," he said.

Hiring in the US has surprised analysts with its strength for more than a year.

The resilience, supported in part by government spending and a wave of immigration, has raised hopes that the world's largest economy might avoid a downturn that can follow on from relatively high borrowing costs.

More recently, some data had raised questions about whether cracks might be starting to appear.

The economy grew at an annual rate of just 1.3% in the first three months of the year, down sharply from the prior three months as growth in consumer spending eased.

Though the hiring in recent months could ultimately prove weaker than currently estimated, the bigger-than-expected job gains in May will soothe fears that "the bottom had suddenly dropped out of the economy," said Paul Ashworth, chief North America economist at Capital Economics said.

"The Fed will remain focused on the upside risks to inflation rather than the downside risks to the real economy," he said.