Further, the job gains were all across the spectrum, from small business firms (less than 49 employees) hiring 17,000 people, midsized businesses (50-499 employees) adding 91,000 people to their payrolls, and large (500 employees or more) adding 50,000 new people in June.
Economists look for USA private payroll employment to have grown by 172,000 jobs in June, up from 147,000 the month before.
"But overall we think that the number is not that bad because this is the only second time that we have seen a miss". The major averages have all moved to the downside after ending Wednesday's trading mixed.
The report, jointly developed with Moody's Analytics, came ahead of the Labor Department's more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment.
The ISM said its non-manufacturing index rose to 57.4 in June from 56.9 in May, with a reading above 50 indicating growth in the service sector. Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 185,000 jobs.
In a separate report, the Labor Department said initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 248,000 for the week ended July 1.
A third report from the Commerce Department on Thursday showed the trade deficit fell 2.3% to US$46.5 billion in May.
The Commerce Department said the trade deficit narrowed to $46.5 billion in May from $47.6 billion in April.
The June performance was down dramatically from the average of almost 80,000 jobs added each month this year.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 750 to 243,000 last week. Economists had expected the deficit to narrow to USD46.2 billion.
Computer hardware stocks have shown a significant move to the downside on the day, dragging the NYSE Arca Computer Hardware Index down by 2.1 percent.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. The PayScale Index, which updated today, shows that USA wages grew 0.5 percent between Q1 and Q2 2017.