Non-farm payrolls rose 1.6 percent to nearly 5 million people, the Federal Office of Statistics (BFS) said. Employment rose in nearly all regions, with the exception of the Italian-speaking canton of Ticino.

In industrial and building sectors, employment rose 1.3 percent, while employment in services increased 1.7 percent.

The situation has been helped by the weakening of the Swiss franc in recent months, which makes Swiss exports more competitive in the neigbouring euro zone - their biggest market.

With open positions increasing and the prognosis for future employment growth trending upward, Swiss employers, in particular in the watch industry and among machinery makers, said it has become harder to find skilled personnel, a development the BFS called "not surprising."

Economists at Credit Suisse said employment growth in the period was surprisingly strong.

"In general for this year, we had anticipated that companies would focus on restoring profit margins, and that the impact on employment would be a bit more moderate," economist Maxime Botteron said.

Swiss watch exports have been in recovery mode, including a 13.8 percent rise in exports in April as the big Hong Kong market buoyed demand for Swiss luxury timepieces.

In April, the Swiss unemployment rate fell to just 2.7 percent, while retail sales have also been on the rise as the value of the franc versus the euro fell early in the year, reducing the incentive for shoppers to cross the border.

Though political turmoil in Italy last week, at least temporarily, reversed the franc's weakening, the general direction has been a franc in retreat, a boon to Switzerland's export-focussed economy.

The currency is now trading around 1.15 per euro, near levels from February when Swiss managers were growing more bullish about their prospects amid strong European demand.

The State Secretariat for Economic Affairs (SECO) last week said the franc's strength was no longer an acceptable justification for companies to apply for government remuneration for shorter working hours they have been using to help ease the currency hit to business.

"I don't think the current currency level will be a factor in slowing down economic growth," Botteron said.

Still, Swiss machinery industry group Swissmem Chairman Hans Hess, speaking on Swiss pubic television on Saturday, said the Swiss central bank should remain vigilant should the situation in Italy deteriorate and uncertainty revive demand for the franc.

"We can live with 1.15 but if the franc strengthens further - if the problems in Italy become very clear - then we absolutely need a central bank that deploys its instruments again," Hess said.

Copyright Reuters, 2018