Hawaii’s unemployment rate plunged in May to 3.1% — its lowest level in more than two years — amid continued signs of improvement in the economy.

The seasonally adjusted rate fell from 3.3% in April to its lowest figure since the start of the pandemic, according to data released Thursday by the state Department of Business, Economic Development and Tourism. The last time the jobless rate was lower was in March 2020 when it hit 2.2%. The following month the number spiked to 22.6% as COVID-19 began to take its toll across the country.

Hawaii’s rate was significantly better than the U.S. rate, which rose to 3.7% in May from 3.4% in the previous month.

“With the labor market steadily improving and economic recovery continuing, I expect that the unemployment rate will be stable at around 3% for the rest of the year, and may be below 3% by the end of this year,” DBEDT chief economist Eugene Tian said.

The state’s labor statistics in May were consistent with DBEDT’s projections for the economy.

“We see our economy will continue to recover with more visitor arrivals, more construction activities, and a lower inflation rate,” Tian said.

Hawaii’s labor force and payroll jobs were relatively flat during May, an indication that more people previously unemployed are now self-employed.

Hawaii’s labor force, which includes those who are employed, those who are unemployed but actively seeking work and those who are self-employed, slipped to 678,800 in May from 678,850 in April. The number of people employed rose by 1,050 in May from the previous month to hit 657,450, its highest level since April 2020. The number of unemployed people fell by 1,100 to 21,400 from 22,500 in April.

“Most of the unemployed people may have started self-employed jobs in May,” Tian said.

Nonfarm payroll jobs fell in May by 200 to 631,000 from 631,200 in April, with the trade, transportation and utilities category showing the biggest job increase with 1,100 positions. The leisure and hospitality sector had the largest decrease in jobs at 1,200.

Nonfarm payroll jobs are calculated from a mail survey of employers and are considered a better indicator of job growth due to a larger sample size than the labor force data, which is compiled from a telephone survey of households. In the payroll count, one person might be counted multiple times if that person has multiple jobs.

The jobless rate were mixed in the state’s four major counties in May from April. State and national labor force data is adjusted for seasonal factors, but the county jobs data does not take into account variations such as the winter holiday and summer vacation seasons.

Honolulu County’s jobless rate remained at 2.6% while Hawaii County’s rate held at 3.0%. Kauai County’s rate slipped to 2.5% from 2.6% and Maui County’s rate fell to 2.5% from 2.8%. In Maui County, Maui’s rate fell to 2.5% from 2.8%, Molokai’s rate declined to 4.2% from 4.6% and Lanai’s rate decreased to 1.5% from 2.4%.