Ahead of Friday's U.S. non-farm payrolls data, the ADP National Employment Report showed private sector payrolls increased by 158,000 jobs last month, lower than the 230,000 positions created in May and below economists' expectations for a gain of 185,000.
In a separate report, the Labor Department said initial claims for state unemployment benefits increased 4,000 to a seasonally-adjusted 248,000 for the week ended July 1. It was the third straight weekly increase in claims.
The U.S. services sector index, released by the Institute for Supply Management on Thursday, rose to 57.4 in June, compared with a forecast of 56.5. The employment index, however, fell to 55.8, compared with 57.8 in May, suggesting a cooling labor market. A reading above 50 indicates expansion.
"Overall, while there were no abnormally large downside surprises in pre-nonfarm payrolls employment indicators for June, there was a general leaning toward the soft side when it came to June's job numbers," said James Chen, head of research at Forex.com in Bedminster, New Jersey. "This could potentially manifest as a continuation of weaker-than-expected employment data this Friday."
Wall Street economists predicted U.S. non-farm payrolls to grow by 179,000 in June, according to a Reuters poll. In May, the U.S. economy created 138,000 jobs.