Private-sector employers added 192,000 jobs in January, more than economists were expecting, in a sign of growth in the labor market, a report by a payrolls processor showed on Wednesday.
Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 165,000 jobs. December's private payrolls were revised down to an increase of 185,000 from the previously reported 215,000.
The report is jointly developed with Moody's Analytics.
Small businesses with less than 50 employees did the most hiring this month, adding 115,000 jobs. But large businesses of more than 500 workers cut 2,000 jobs.
"The job market is slowly, but steadily, improving," Mark Zandi, chief economist of Moody's Analytics, said in a statement.
By industry, professional and business services firms led gains with 40,000 jobs, while the manufacturing sector fared the worst, cutting 3,000 positions.
U.S. stock index futures showed little reaction to the ADP report, though futures extended declines later in the morning following data that showed the economy unexpectedly contracted in the fourth quarter.
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.
"The data suggests that jobs growth is accelerating and bodes well for Friday's payrolls report," said Omer Esiner, analyst at Commonwealth Foreign Exchange in Washington.
The government release is expected to show hiring held steady in January with 160,000 jobs created.
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.