Private sector job growth shakes off fiscal pinch

"Businesses are adding to payrolls in most industries and across all company sizes. The job market has admirably weathered the fiscal headwinds, tax increases and government spending cuts," he said. "This bodes well for the next year when those headwinds are set to fade."

The private sector report comes two days before the government will release its job figures for the month of July, which comes at a crucial time for policymakers. The data comes as the Federal Reserve is closely monitoring the labor market for signs of steady improvement, an indication it can begin easing off the historic stimulus it has pumped into the economy in recent years. The central bank will release its latest policy statement Wednesday afternoon.

And Congress and the White House will make hay of whatever economic data arrives in the coming months as they continue to prep for major fiscal fights in the fall over funding the government and raising the debt limit.

The ADP report also came minutes before the Commerce Department reported the economy grew 1.7 percent in the second quarter, easily beating economist expectations.

While Republicans have blasted the Obama administration for hampering small businesses with new regulations, the ADP report found that businesses with less than 50 employees reported the strong job growth, hiring 82,000 workers. Medium and large businesses combined for another 117,000 jobs.

Manufacturing was the only job sector to report job losses in July, trimming 5,000 jobs. Employment in construction, trade, transportation, and utilities, and professional and business services all reported healthy gains.

The service sector led the way on job growth, accounting for the bulk of the new jobs compared to the goods-producing portion of the economy.

ADP's June report was also revised upward, from 188,000 to 198,000 jobs.