WRAPUP 2-U.S. jobs data upbeat, but trade and services dim outlook
* Private employers add 188,000 in June
* Weekly jobless claims fall 5,000
* Trade deficit widens in May on imports
* Services sector growth slows, but employment increases
WASHINGTON, July 3 (Reuters) - U.S. private employers stepped up hiring in June and new applications for unemployment benefits fell for a second straight week last week, pointing to a steadily improving labor market picture.
Still, the pace of economic growth remains lackluster, with other data on Wednesday showing a sharp slowing in activity in the service industries in June and a wider trade deficit in May.
Private payrolls increased 188,000 last month, the ADP National Employment Report showed, up from 134,000 jobs added in May. Economists had expected the report, jointly compiled by payrolls processor ADP and Moody's Analytics, to show a gain of 160,000 private jobs.
In a separate report, the Labor Department said initial claims for state unemployment benefits slipped 5,000 to a seasonally adjusted 343,000.
"The (jobs) market is holding firm," said Mark Zandi, chief economist at Moody's Analytics in West Chester, Pennsylvania.
The data were released ahead of the government's more comprehensive employment report on Friday. Not much change in the recent pattern of moderate job gains is expected in June.
Nonfarm payrolls are expected to have increased 165,000 in June, according to a Reuters survey of economists, a touch below May's tally of 175,000 jobs. But that would be higher than the monthly average of 155,800 over the past three months.
The unemployment rate is expected to fall a tenth of a percentage point to 7.5 percent. The employment report could shed fresh clues on the timing of the Federal Reserve's plan to start scaling back its monetary stimulus.
Fed Chairman Ben Bernanke said last month the U.S. central bank expected to trim its bond purchases later this year and halt the program by mid-2014, as long as the economy progresses as it expects.
SERVICE INDUSTRIES SLOWING
Separately, the Institute for Supply Management's services index fell to 52.2 in June, the lowest level since February 2010, from 53.7 in May. A reading above 50 indicates expansion in the service industries, which account for more than two-thirds of the economy.
Taken together with a Commerce Department report showing the deficit on the trade balance widened 12.1 percent to $45.0 billion in May, that suggested second-quarter gross domestic product would probably fall well below the 1.8 percent annual pace recorded in the first three months of the year.
RBS cut its second-quarter GDP estimate to 0.8 percent from 1.4 percent on the trade data, while Barclays slashed its estimate by six tenths of a percentage point to 1 percent.
The jump in the trade gap reflected an increase in imports, an indication of firming underlying domestic demand. Even though the pace of growth in the services sector slowed in June, employers still hired more workers.
U.S. shares were trading mixed, while prices for U.S. Treasury debt were flat. The dollar fell marginally against a basket of currencies.
In the trade report, imports rose 1.9 percent to $232.1 billion, the highest since the record level of $234.3 billion set in March 2012. When adjusted for inflation, imports were a record $167.2 billion.
Exports fell 0.3 percent to $187.1 billion, with increases in categories such as autos and auto parts and capital goods more than offset by a decline in consumer goods, food, feeds and beverages and industrial materials.
That reflects sluggish growth in the rest of world, particularly in major trading partners like China.
"The steady gain in import activity points to continued improvement in domestic activity and signals a broad-based gain in demand," said Millan Mulraine, senior economist at TD Securities in New York.
"This, however, must be set against the weak global backdrop which continues to unsupportive to the U.S. economic recovery."