The US private sector stepped up hiring more than expected last month, a closely watched survey showed Thursday on the eve of the much-awaited August government jobs report Friday.

Payrolls company ADP said private-sector employment rose by 201,000 in July, after an upwardly revised July gain of 173,000.

The August jobs number was well above the average forecast of 143,000, and showed a strong 29,000 increase in jobs in the service sector from July, to 185,000.

Manufacturing gains fell to 3,000, following an increase of 6,000 in July, another sign of the slowdown in the sector that has been a key factor in the recovery from a deep 2008-2009 recession.

The world's largest economy continues to struggle with tepid growth, at 1.7 percent in the second quarter, and high unemployment.

The jobless rate ticked up to 8.3 percent in July and the United States added a meager 163,000 jobs.

On Friday, the Labor Department is expected to report the jobless rate held steady at 8.3 percent in August and jobs increased by 144,000.