Private employers added 42,000 jobs in July, compared to a revised gain of 19,000 in June, a report by a payrolls processor showed on Wednesday.

KEY POINTS: * The June figure was originally reported as a gain of 13,000.

* The median of estimates from 33 economists surveyed by Reuters for the ADP Employer Services report, jointly developed with Macroeconomic Advisers LLC, was for a rise of 40,000 private-sector jobs in July.

* The ADP figures come ahead of the government's much more comprehensive labor market report on Friday, which includes both public and private sector employment.

* That report is expected to show a fall in overall nonfarm payrolls of 65,000 in July, based on a Reuters poll of analysts, but a rise in private payrolls of 90,000.

COMMENTS:

ALAN LANCZ, PRESIDENT, ALAN B. LANCZ & ASSOCIATES INC., TOLEDO, OHIO:

It's definitely a positive heading in the right direction, it should bode well for this rally that we've had since the first week of July.

It was good to finally see some numbers that were above consensus and show that double-dip might be something that was exaggerated in the first few days of July.

It's set the stage for giving buyers a little bit of a boost and a little bit of confidence, we saw futures were up after the report

Friday will be important to see a follow-through on the data, but the stage is set for this rally to continue for at least a little bit with the momentum its built.

JOHN RYDING, ECONOMIST, RDQ ECONOMICS, NEW YORK:

The ADP report points to a modest increase in private payrolls in July and we see no reason to change our projection of a 100,000 increase in those payrolls. While the 42,000 gain in ADP payrolls is below our forecast for Friday's number, we note that ADP reported a decline of 6,000 in manufacturing payrolls, while the ISM report on manufacturing pointed to a further rise in employment in the sector. We now await the non-manufacturing ISM report for further clues to Friday's number.

LINDSEY PIEGZA, MARKET ANALYST, FTN FINANCIAL, NEW YORK:

What this will do is to lower the bar for the July payroll report. Employment is still growing. This sets the trend for the new quarter, which was losing steam at the end of last quarter. We know we have to rely on the private sector for jobs and there is still a lot of excess of debt and credit we have to work through. We are taking small steps. There is still a long way to go before we get to 250,000 a month gain in payrolls. We are going to see subpar job growth for quite some time.

What this means to the average person on Main Street is that there is not a lot of jobs out there. There is still a lot of pressure on consumers and investors. We are going to see confidence to bounce in the low end of the range. Job is number one for consumer optimism.

MICHAEL O'ROURKE, CHIEF MARKET STRATEGIST, BTIG LLC, NEW YORK:

Obviously the number was a little better than expected but its still a small level of employment growth. The fact that it was better than expected is a good sign, but its more of the same of what we're seeing in the jobs market. The recovery remains slow, and its something that's going to take longer to play out.

The Challenger number was a positive, but since its a year-over-year jobs cut number, at this point its less important when we see comparisons. What we need is private payroll growth. We're getting it modestly, but we need it to accelerate.

Our expectations for Friday's number are pretty much in line. The current estimate for private payrolls is 90,000, and with this number that's hopefully within reach, especially since this was a beat.

JESSICA HOVERSEN, FIXED INCOME AND CURRENCY ANALYST, MF GLOBAL, CHICAGO:

It looks as though the euro is softening a little bit after the release. The market really needed to see an improvement in U.S. data particularly after the European data which showed a softening in the service indices. That is allowing for dollar strength. We need to see better U.S. data and weak European data for the dollar to rally.

MARKET REACTION: STOCKS: U.S. stock index futures turn positive BONDS: U.S. Treasury debt prices on long end pare gains DOLLAR: U.S. dollar pares losses versus yen

New York Unemployment Jobs