US private employers stepped up hiring in May, signaling that the labour market was rapidly tightening amid a firming economy.

This could encourage the Federal Reserve to raise interest rates later this month. 

While other data today showed a jump in the number of Americans filing for unemployment benefits last week, the data was probably distorted by the Memorial Day holiday.

Claims for eight states, including California, had yet to be estimated. 

According to the ADP National Employment Report, private payrolls increased by 253,000 jobs last month, beating economists' expectations for a gain of 185,000 jobs. Private payrolls rose by 174,000 jobs in April. 

The ADP report is jointly developed with Moody's Analytics and was released ahead of the Labor Department's more comprehensive nonfarm payrolls report tomorrow, which includes both public and private-sector employment. 

According to a Reuters survey of economists, payrolls likely increased by 185,000 jobs in May after a gain of 211,000 in April. The unemployment rate is forecast to be unchanged at a 10-year low of 4.4%.

In a separate report today, the Labor Department said initial claims for state unemployment benefits jumped 13,000 to a seasonally adjusted 248,000 for the week ended May 27. 

It was the 117th week in a row that claims were below 300,000, a threshold associated with a healthy labour market. That is the longest such stretch since 1970, when the labor market was smaller. 

A Labor Department official said claims for California, Hawaii, Kansas, Kentucky, Louisiana, North Dakota, Texas and Virginia were estimated because of the Memorial Day holiday. 

The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, rose only 2,500 to 238,000 last week. 

Last night, the Fed said in its Beige Book report of anecdotal information on business activity collected from contacts nationwide that labour markets continued to tighten from early April up to late May. 

The US Fed said "most" districts had cited worker shortages across a broadening range of occupations and regions. 

Economists expect the Fed will raise interest rates by 25 basis points at its June 13-14 policy meeting. 

The claims report also showed the number of people still receiving benefits after an initial week of aid fell 9,000 to 1.92 million in the week ended May 20. 

The so-called continuing claims now have been below 2 million for seven consecutive weeks, pointing to shrinking labour market slack.

Meanwhile, a third report by global outplacement consultancy Challenger, Gray & Christmas showed layoffs announced by US-based employers surged 41% to 51,692 in May. 

Nearly 40% of the job cuts were announced by Ford, according to the report.