Even the White House had predicted job gains would slow last month, which Biden had said was part of the natural downshift after the rapid rebound of the world's largest economy from the pandemic downturn.
Instead, US job growth jumped in July, as the economy added a surprising 528,000 positions, more than double what economists were expecting, according to official data released Friday. That took the jobless rate back to the pre-pandemic level of February 2020.
"Today, the unemployment rate matches the lowest it's been in more than 50 years: 3.5%," Biden said in a statement.
"More people are working than at any point in American history ... there's more work to do, but today's jobs report shows we are making significant progress for working families."
On top of the hiring surge last month, the Labor Department report said the outsized job gain in June was revised higher, as was May, adding a total 28,000 positions to the initial data.
Meanwhile, the closely-watched report showed wages jumped in July -- with average hourly earnings up 15 cents from June -- stoking concerns about a possible wage-price spiral. Over the past 12 months, average hourly earnings have increased by 5.2 percent.
That's good for families struggling to make ends meet as they face soaring prices for groceries and gas, but could drive firms to raise prices further.
With inflation topping nine percent, the highest in more than 40 years, the Federal Reserve has been raising interest rates aggressively to cool the economy, and economists now say a third consecutive three-quarter-point hike is likely in September.
After recent data showed GDP contracted for the second consecutive quarter -- causing many to say the economy is in recession -- US stocks had been gaining ground due to investor optimism that the Fed would be able to dial back its inflation-fighting efforts.
But Wall Street opened sharply lower following the jobs report, amid concerns about coming rate hikes.
With the latest increase, total non-farm employment recovered to its pre-pandemic level, the data showed, and hiring topped 430,000 in the past three months.
KPMG economist Diane Swonk's initial reaction: "Wow."
"This report pushes the Fed towards a 75 basis point move AGAIN in September," she said on Twitter.
From zero at the start of the year, the Fed has raised the benchmark borrowing rate four times, and pledged to continue its war on inflation.
And central bankers this week have made it clear that investor optimism about a possible downshift was misplaced.
"Recession is now less of a worry. Inflation is more of a worry," Harvard economist Jason Furman tweeted. "The Fed will likely need to do more."
The central bank will get two more employment reports and multiple inflation reports before its next policy meeting in mid-September.
While employers for months have been struggling to find workers -- with nearly two open positions for every unemployed person in the work force -- job gains have continued.
Hiring was robust in leisure and hospitality and health care, which each adding 96,000 or more in july, while manufacturing and construction gained at least 32,000.
Builders in particular have been under pressure as the struggle to meet high demand for construction, especially homes, but employment in the sector is now back to its pre-pandemic level, the report said.
But there were signs of strains as well. The number of people working part time for economic reasons, which dropped sharply in June, rebounded in July. And a growing number of workers are taking on second jobs, including 403,000 with two full-time positions.
The share of people in the labor force has been stuck at around 62 percent, and some economists are pointing to the impact of long-Covid, which is keeping potential workers on the sidelines.
Kathryn Bach of the Brookings Institution said she believes there could be as many as four million people prevented from working due to the effects of Covid-19.
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