Sandeep Mohan (C) stands in line with other job seekers at the entrance to the National Capital Region Job Fair sponsored by Virginia Tech University at their branch campus in Falls Church, Virginia, March 10, 2009. (REUTERS / Jonathan Ernst)

U.S. private employers axed more jobs in July but at the slowest pace since October, offering a glimmer of hope the labor market is stabilizing.

U.S. companies shed 371,000 jobs in July, compared with a revised 463,000 drop in June, a report by a private employment service said on Wednesday.

The June decline was originally reported at 473,000.

The median of estimates from 26 economists polled by Reuters for the ADP Employer Services report, jointly developed with Macroeconomic Advisers LLC, was for 345,000 private-sector jobs lost in July.

It is of course worse than expected, but the number is well off its highs, indicating modest improvement in the labor market, said Dan Greenhaus, an analyst with Miller Tabak & Co. in New York.

The ADP figure is a proxy for some analysts for the government's non-farm payroll reading.

The U.S. Labor Department will release its employment data at 8:30 a.m. (1230 GMT) on Friday. The median forecast for non-farm payrolls is for a decline of 320,000 in July, compared with a 467,000 drop in June.