U.S. companies hired the most workers in 10 months in June, raising wages and offering incentives to entice millions of unemployed Americans sitting at home, in a tentative sign that a labor shortage hanging over the economy was starting to ease.

The Labor Department's employment report on Friday showed 151,000 people entered the labor force last month, though the proportion of working-age Americans who have a job or are looking for one did not budge from the tight range it has been in since June 2020.

The acceleration in hiring suggested the economy ended the second quarter with strong momentum, following a reopening made possible by vaccinations against COVID-19.

"While businesses are still having a hard time filling positions, staffing challenges do not seem quite as dire based on today's pickup in payrolls," said Sarah House, a senior economist at Wells Fargo in Charlotte, North Carolina.

The survey of establishments showed non-agriculture payrolls increased by 850,000 jobs last month. The economy created 15,000 more jobs in April and May than previously reported. Employment is about 6.8 million jobs below its peak in February 2020.

Economists polled by Reuters had forecast payrolls would advance by 700,000 jobs. Women, who have been hardest hit by the pandemic, took nearly half of the jobs created last month. There are a record 9.3 million job openings.

President Joe Biden hailed the pick-up in hiring. "This is historic progress, pulling our economy out of the worst crisis in 100 years, driven in part by our dramatic progress in vaccinating our nation and beating back the pandemic as well as other elements of the American Rescue Plan," he said in remarks at the White House.

The leisure and hospitality industry added 343,000 jobs, accounting for 40 percent of the employment gains in June. More than 150 million people are fully vaccinated against COVID-19, which has led to the lifting of pandemic-related restrictions on businesses and mask mandates. Government employment jumped by 188,000 jobs, driven by state and local government education, which were boosted by fewer end-of-school-year layoffs relative to the previous year.

Manufacturing added a modest 15,000 jobs, with employment at motor vehicle assembly plants declining 12,300. A global semiconductor shortage has forced some automakers to cut production. Other manufacturing industries are also grappling with shortages of raw materials and workers.

Construction payrolls contracted for the third straight month. Though the sector remains supported by robust demand for housing, scarcity of workers and expensive raw materials like framing lumber are hampering home-building.

Politicians, businesses and some economists have blamed enhanced unemployment benefits, including a $300 weekly check from the government, for the labor crunch. Lack of affordable child care and fears of contracting the coronavirus have also been blamed for keeping workers, mostly women, at home.

There have also been pandemic-related retirements as well as career changes. Economists generally expect the labor supply squeeze to ease in the fall as schools reopen and the government-funded unemployment benefits lapse, but they caution that many unemployed will probably never return to work.

The three major U.S. indices – the S&P, Dow and Nasdaq – closed at record highs. The streak was the longest run of consecutive record closes since June 1997, according to S&P Dow Jones Indices.