NEW YORK - June 1, 2011 - U.S. private-sector payroll growth slowed sharply in May, falling to the lowest level in eight months and prompting some economists to lower forecasts for job growth in Friday's U.S. government report.

The ADP Employment Services report is the latest in a string of data suggesting economic growth remained sluggish early in the second quarter after hitting a soft patch in the first months of the year. The economy grew at a tepid 1.8% annual rate in the first three months of the year, softer than analysts originally anticipated.

"This only adds fuel to the argument that the slowdown story is here in the U.S.," said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York. "This is exactly what we do not want when other significant data shows things are slowing down as well."

The ADP report showed private employers added a scant 38,000 jobs last month, falling from a downwardly revised 177,000 in April and well short of expectations for 175,000. It was the lowest level since September 2010.

The report boded poorly for the key U.S. non-farm payrolls report at the end of the week. Credit Suisse lowered its estimate for Friday's employment number to 120,000 from its previous forecast of 185,000 and its private payroll estimate to 135,000 from 200,000.