PITTSBURGH, March 31 (Reuters) - The U.S. economy is still in a tough spot but is gradually regaining its balance after a series of policy mistakes that made the country weaker and less secure, Treasury Secretary Timothy Geithner said on Wednesday.

We are coming back, and we are coming back faster and stronger than most people predicted -- faster and stronger than Europe and Japan, Geithner said after meeting with steel executives and union leaders here.

The U.S. Treasury chief made a quick trip to Pittsburgh, a former steelmaking center, to highlight improving prospects for the hard-hit manufacturing sector and to urge lawmakers to agree to measures for reining in financial firms that were at the heart of the financial crisis.

Geithner toured a plant of Allegheny Technologies Inc. in nearby Washington, Pennsylvania. The company makes titanium specialty sheet for the oil and gas industry and other specialty metals for aerospace and defense companies.

There were fresh reminders on Wednesday of the strains the economy still faces, including a report from U.S payrolls processor ADP showing that U.S. private employers shed 23,000 jobs in March, missing expectations for a rise of 40,000 jobs.

The government is due to release its closely watched monthly payrolls report on Friday. Ahead of the ADP report, economists polled by Reuters expected payrolls to rise by 190,000 in March, which would be the second monthly increase since the recession began in December 2007.

Geithner called on Congress to provide tax breaks for small businesses and enact new rules for the financial system. The U.S. House of Representatives has passed a bill to impose tighter rules on financial firms but the Senate has yet to do so.

Geithner, who leaves next week for a trip to India, repeated that he believes that China will eventually decide it is in its own best interest to make its yuan currency more flexible, but did not say when that might happen.

I am very confident that they are going to decide it is in their interest to move on currency reforms, Geithner told reporters. It's very important that they take the steps they said they would take to allow their currency to move to a more flexible system. (Editing by Leslie Adler)

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