PhotoWhile the economy managed to crank out new jobs in May, the pace of job creation continues to slow.

The ADP National Employment Report, which is produced by the payroll firm in collaboration with Moody's Analytics, reports private sector employment increased by 173,000 jobs last month.

Some 214,000 jobs were created in February, followed by 194,000 in March and 156,000 in April. So while the May showing is a month-over-month improvement, it's well below the pace seen earlier in the year.

"Job creation appears to have slowed as we move further into 2016," said Ahu Yildirmaz, VP and head of the ADP Research Institute. "Challenging global conditions affecting hiring at large companies and a tightening labor market for skilled workers are among the factors that may be contributing to the slowdown."

Where they're hiring

The report, which is derived from ADP's actual payroll data, shows employment by businesses with 49 or fewer employees increased by 76,000 jobs, compared with an upwardly revised 101,000 in April. Companies with 50-499 employees hired 63,000 workers in May -- 24,000 more than the month before.

Job creation rose by 9,000 from April at large companies -- those with 500 or more employees -- to 34,000, while companies with 500-999 employees added 11,000 and companies with over 1,000 employees added 24,000.

Employment at goods-producing companies dropped by 1,000 jobs in May after losing a 7,000 the month before. The construction industry added 13,000 jobs, while, manufacturing lost 3,000 jobs following a loss of 10,000 in April.

Service-providing companies added 175,000 jobs last month, while professional/business services contributed 43,000. Trade/transportation/utilities grew by 28,000 jobs, and financial activities added 13,000.

"Job growth has moderated this spring as energy companies and manufacturers shed jobs,” said Moody's Analytics Chief Economist Mark Zandi. “Retailers are also more circumspect in their hiring. Despite the recent slowdown, job growth remains strong enough to reduce underemployment."

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