U.S. private employers eliminated fewer jobs last month, suggesting the job market may be on the mend, while the U.S. services sector grew at its fastest pace since the recession began.

Also, planned layoffs by U.S. firms in February fell to the lowest level since 2006, according to a report that also said employers may be poised to start adding workers.

The news came ahead of Friday's key monthly U.S. nonfarm payrolls report and supports the view the job market may be recovering, even as analysts are predicting recent winter storms may have affected the upcoming data.

Private employers cut 20,000 jobs in February, compared with 60,000 job losses in January, the report by ADP, a payroll processor, showed on Wednesday. The February number was in line with the median estimate.

This is a positive sign that we are turning the corner toward job growth, said David Resler, chief economist at Nomura Securities International in New York.

Separately, the Institute for Supply Management said its services index rose more than expected in February. The reading was the highest since December 2007.

An employment component in the index also rose.

U.S. stocks rose on the data, while U.S. Treasury bonds eased. The dollar was down against the euro as Greece pledged money in pay cuts and tax increases to reduce its deficit.

It's an encouraging number for the recovery, said Jim O'Sullivan, chief economist at MF Global in New York. The trend in employment is still improving.

The services sector data follows Monday's ISM report, which showed that U.S. manufacturing grew in February, though more slowly than expected.

Strength in manufacturing was also seen in a global survey on Wednesday. The Global Total Output Index showed the pace of growth picked up in February. with a strong manufacturing sector leading the way for services.

Also on Wednesday, data showed the number of planned layoffs at U.S. firms fell to its lowest since July 2006, according to the report from global outplacement consultancy Challenger, Gray & Christmas Inc.

Even though some sectors of the economy, including manufacturing, have been recovering from the worst U.S. economic downturn since the 1930s, the job market has remained weak, with unemployment near 10 percent.

High unemployment has also held back consumer spending, creating concerns that the economic recovery could struggle.

Analysts expect Friday's Labor Department report, the most closely watched measure of the country's jobs market, to show the economy lost 50,000 positions last month, compared with 20,000 the month before, according to Reuters data.

They expect unemployment to rise to 9.8 percent from last month's 9.7 percent.

(Additional reporting by Leah Schnurr, Steve Johnson, Rodrigo Campos and Richard Leong; Editing by James Dalgleish)

Manufacturing Unemployment