UNITED States private employers added a larger-than-expected 198,000 jobs in February, bolstering hopes that hiring across the economy is improving, a report by a payrolls processor showed yesterday.

Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 170,000 jobs. January's private payrolls were revised up to an increase of 215,000 from the previously reported 192,000.

The report is jointly developed with Moody's Analytics.

"It feels like underlying job growth continues to improve, and at the current pace, this should be enough to start bringing down unemployment," said Mark Zandi, chief economist at Moody's Analytics.

The jobless rate is now at 7.9 percent.

"In a really rip-roaring economy, we'd be creating closer to 300,000 jobs a month or a bit north of that. So we're not there yet, but we're moving in the right direction," he said.

Hiring ticked up despite worries about government belt-tightening and higher taxes, though Zandi said those factors could slow the pace of growth later this year.

Crucially, hiring last month was spread evenly across small, medium and large businesses, the report showed. Private sector hiring in January was skewed heavily toward small businesses.

The number may bode well for the government's more comprehensive labor market report, due tomorrow, which includes both public and private sector employment.

Millan Mulraine, fixed income strategist at TD Securities in New York, said the ADP report "reinforces our bias for an above-consensus 180,000 gain in private payrolls in February."