A man grabs his briefcase as he waits in line to speak with employers at the UJA-Federation Connect to Care job fair in New York, March 21, 2012.
Companies added more jobs than expected in July, suggesting the labor market is chugging along, though the pace of growth is far from robust.
Separate data showed the manufacturing sector grew at its slowest pace in nearly three years last month as a debt crisis in Europe and economic and political uncertainty at home dented demand.
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The ADP National Employment Report showed private employers created 163,000 jobs in July, more than the 120,000 that had been expected, though slightly less than June's 172,000. June was originally reported as 176,000.
"The U.S. continues to have consistently positive private sector payroll growth, albeit at a painfully slow rate," said Eric Stein, VP and portfolio manager at Eaton Vance Management in Boston.
The ADP figures come ahead of the government's much more comprehensive labor market report on Friday, which includes both public and private sector employment.
That report is expected to show nonfarm payrolls rose by a modest 100,000 last month, while the unemployment rate is seen staying the same at 8.2 percent.
Economists often refer to the ADP report to fine-tune their expectations for the payrolls numbers, though it is not always accurate in predicting the outcome.
The ADP report has differed from the government's private jobs number by an average of about 50,000 so far this year, said Cooper Howes, economist at Barclays.
If that continues, it would be in line with a forecast for a gain of 100,000 nonfarm payrolls last month, said Howes.
Stock index futures held gains immediately after the data, while Treasuries extended losses and the euro was steady against the dollar.
The day's data came as Federal Reserve policymakers head into the second day of their two-day meeting with investors watching to see if the central bank will unveil fresh measures to bolster the economy.
The pace of economic growth has slowed in recent months as the recovery has been buffeted by the euro zone debt crisis, a struggling U.S. labor market and concerns over higher taxes and government spending cuts that are set to take place next year.
Data showed growth in the manufacturing sector slowed again in July with the final Markit Manufacturing Purchasing Managers Index falling to 51.4 from 52.5 in June.
Manufacturing had been a tent poll of the recovery, but the sector has shown recent signs of weakening. Investors will get another look at activity with the Institute for Supply Management report later on Wednesday, which is expected to show growth edged up after a contraction in June.
Manufacturing activity in the euro zone contracted for the eleventh straight month in July as the downturn deepened. As well, China's official measure of factory activity fell to an eight-month low.
Separate data showed lending to small businesses fell in June to the lowest level since October with the Thomson Reuters/PayNet Small Business Lending Index falling to 98.5 from 103.8 in May.