The payroll company ADP said Wednesday that companies hired in July at the fastest pace since December. And it revised up its estimate of the number of jobs the private sector created in June from 188,000 to 198,000.
Professional and businesses services companies added 49,000 jobs this month, construction companies 22,000. But manufacturers shed 5,000.
Small businesses?those with fewer than 50 employees?added 82,000 jobs.
"Job growth is consistently good?solid across industries," said Mark Zandi, chief economist with Moody's Analytics, which compiled the jobs report for ADP.
The healthy hiring suggests that the economy is handling tax cuts that took effect in January and federal spending cuts that began in March "more gracefully than I expected," Zandi said.
He noted that the drop in manufacturing jobs probably reflected cuts by defense contractors pinched by a tighter federal budget. A weak global economy has also hurt U.S. exporters.
The ADP report is derived from payroll data and tracks private employment. It does not report government hiring.
ADP's survey has diverged at times from the U.S. Labor Department's more comprehensive monthly jobs report. The department's employment report for July will be released Friday. It's expected to show that the economy added 183,000 jobs in July after adding 195,000 in June, according to a survey of economists by FactSet.
"The picture for the US labor market seems to have improved in the past couple of months or so," Annalisa Piazza, an economist at Newedge Strategy, said in a research note.
Zandi cautioned that recent job growth has come disproportionately in lower-paying businesses such as retailers, hotels and restaurants.