Several signs point to cautious optimism about jobs report

— -- A batch of reports Thursday suggest the job market may be emerging from a spring slump and raise hopes that a government employment report Friday will exceed expectations.

Private employers added 176,000 jobs in June, far more than the 95,000 economists estimated, as small businesses and service firms accounted for much of the gains, according to payroll provider ADP's survey of businesses. ADP's revised total for May was 136,000 jobs.

Small businesses, with up to 49 workers, added 93,000 jobs; mid-sized firms, with 50 to 499 workers, added 72,000; and large businesses added 11,000. Construction payrolls rose by 8,000, while manufacturers added 4,000 positions, reversing recent declines.

The modest gains by those two industries support the view of many economists that warm winter weather sparked an outsized level of construction and manufacturing activity early this year, leading to weaker than usual spring gains this year. That's partly why the government reported about 250,000 average monthly job gains from December through February, a pace that slowed to less than 100,000 the past three months, economists say.

Conrad DeQuadros of RDQ Economics says the slowdown was more dramatic than other economic reports indicated. "Nothing would suggest the degree of slowing that we've seen the last couple of months," he says.

Other positive reports out Thursday lent support to the idea that job growth may be settling into a more moderate pace:

•The number of Americans applying for jobless benefits for the first time fell by 14,000 to 374,000, while the four-week average dipped by 1,500 to 385,750. Still, DeQuadros noted claims averaged 385,000 in June, up from 377,000 in May.

•An index of service-sector employment rose to 52.3% from 50.8%, according to the Institute of Supply Management. The overall measure of service firms fell as new orders, a good barometer of future sales, slipped to 53.3% from 55.5%. But the sector is is still growing. An index above 50% indicates expansion; below 50% means contraction.

•The number of layoffs announced in June fell to a 13-month low of 37,551, about 40% below May's total according to outplacement firm Challenger, Gray & Christmas.

Economists estimate the Labor Department's report Friday on June employment, which includes government payrolls that have been shrinking, will show 95,000 job gains and that the unemployment rate will hold at 8.2%. But DeQuadros said Thursday's encouraging reports increases the odds that the actual jobs figure will be higher.

"There is hope that tomorrow's number may not be the disaster many economists had forecast," said Joel Naroff of Naroff Economic Advisors in a research note.

DeQuadros cautioned that the economy and job market are still far from healthy and the nation is unlikely to return to the robust employment advances of early this year. The European financial crisis and economic downturn, along with the possibility of higher U.S. taxes and reduced government spending have sapped business confidence.

But DeQuadros expects moderate monthly job growth of about 175,000 the rest of the year because of falling gasoline prices that should boost consumer spending and European leaders' recent agreement to support heavily debt-burdened nations that use the euro currency.

Most other recent economic data haven't been encouraging, however.