WASHINGTON • Private US firms hired at a slightly slower pace last month, with nearly all new employment in the services sector, payroll firm ADP said yesterday.

Non-farm private employment rose 177,000, below the 255,000 increase in March, and the lowest increase since October, although the result was slightly better than the consensus forecast.

The report, which covers 411,000 companies and 24 million workers, comes ahead of tomorrow's closely-watched US employment data release, although the two reports can diverge widely.

In March, the United States Labour Department reported a rise of just 98,000 non-farm payrolls, far below the ADP figure.

Analysts expect tomorrow's report to show a gain of 180,000 jobs for April.

Moody's Analytics chief economist Mark Zandi said job growth slowed last month due to a pullback in construction and retail jobs, which continued their retreat.

"The softness in construction is continued payback from outsized growth during the mild winter," he said in a statement.

"Brick-and-mortar retailers cut jobs in response to withering competition from online merchants."

Of the total, 165,000 new jobs were in services, while construction saw a decline of 2,000, and manufacturing jobs rose by 11,000.

ADP Research Institute vice-president Ahu Yildirmaz said that despite the slower pace of hiring in the first quarter of the year, "the growth is more than strong enough to accommodate the growing population as the labour market nears full employment".

Broken down by company size, medium-sized businesses hired 78,000 new employees last month, and have "showed persistent growth for the past six months", he said. Small businesses added 61,000 staff, while large firms hired 38,000, the ADP report showed.

Meanwhile, the non-manufacturing index by the Institute of Supply Management hit 57.5 for the month of April, topping expectations. The index had hit 55.2 in March, down from 57.6 in February.

This represented continued growth in the non-manufacturing sector but at a slower pace. A reading above 50 indicates expansion in the service sector, and a reading below 50 indicates contraction.

Last month, 16 non-manufacturing industries reported growth, including wholesale trade, utilities, arts, mining and retail trade, the group said.

AGENCE FRANCE-PRESSE, REUTERS