U.S. companies hired the fewest workers in six months in April as they faced increasing difficulty finding qualified workers in a tightening labor market, a report by a payrolls processor ADP showed on Wednesday.
ADP said private employers expanded their payrolls by 177,000 jobs last month, which was the smallest gain since the 62,000 increase last October.
Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 175,000 jobs, with estimates ranging from 140,000 to 236,000.
Private payroll gains for March were revised down to 255,000 from an originally reported 263,000 increase.
The report is jointly developed with Moody's Analytics.
"Job growth will slow as companies will find it harder to fill open positions," Moody's Analytics' chief economist Mark Zandi said on a conference call with reporters. "The labor market will get tighter. Wage growth is picking up."
The world's biggest economy is on track to produce about two million jobs in 2017, compared with 2.5 million last year, while the jobless rate may fall to 4.0% in the next 12-24 months, Zandi said.
An improving labor market will likely support traders' expectations that the Federal Reserve will raise interest rates further in the coming months.
The Federal Open Market Committee is widely expected to leave interest rates unchanged at the current range of 0.75-1.00 percent at its policy meeting that will conclude later Wednesday.
Traders anticipate the Fed's policy-setting group would hike rates by a quarter point at its next meeting on June 13-14 FFM7.
The ADP figures come ahead of the U.S. Labor Department's more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment.
Economists polled by Reuters expect U.S. private payroll employment to have grown by 185,000 jobs in April, up from 89,000 the month before. Total non-farm employment is expected to have risen by 185,000.
The unemployment rate is forecast to tick up to 4.6% from the 4.5% recorded a month earlier.