Job losses in the U.S. private sector fell to their lowest monthly level in nearly a year, a report by a private employment service showed on Wednesday, signaling stabilization in the labor sector.

U.S. employers cut 298,000 jobs in August, fewer than a revised 360,000 jobs lost in July, according to the ADP Employer Services report. The July decline was originally reported at 371,000 last month.

The median of estimates from 31 economists surveyed by Reuters for the ADP report, jointly developed with Macroeconomic Advisers LLC, was for 250,000 private-sector jobs lost last month.

Despite recent indications that overall economic activity is stabilizing, employment which usually trails overall economic activity, is still likely to decline for at least several more months, albeit at a diminishing rate, ADP said.

ADP and Macroeconomic Advisers said the report is designed as a proxy of the government's monthly non-farm payrolls report.

The U.S. Labor Department will release August payroll figures at 8:30 a.m. EDT on Friday.

Earlier, Challenger, Gray & Christmas Inc said planned layoffs at U.S. firms fell in August to 76,456, the second smallest monthly total so far in 2009.

(Reporting by Richard Leong; editing by Jeffrey Benkoe)