Automatic Data Processing Inc posted higher quarterly earnings on Wednesday as the world's largest payroll processing company trimmed expenses to offset lower sales.

Net income from continuing operations rose to $284 million, or 56 cents a share, in the fiscal first quarter, ended September 30, from $278 million, or 54 cents a share, a year earlier.

Revenue fell 4 percent to $2.1 billion, while costs decreased 5 percent to $1.7 billion.

In the United States, where ADP processes one in every six payroll payments, revenue from the payroll and payroll tax filing business decreased 7 percent. The number of employees on payrolls of ADP clients fell 6.5 percent on a same-store basis as American firms cut hundreds of thousands of jobs.

Certain market indicators suggest that the U.S. economy has reached the trough of the downturn and has begun to stabilize, Chief Executive Gary Butler said in a statement. However, the economic landscape is still challenging and the timing of the inevitable recovery remains uncertain.

The company adjusted its outlook for 2010. ADP now estimates revenue will fall 1 percent to 2 percent, compared with a previous forecast for a decline of 2 percent to 4 percent.

It forecast earnings per share of $2.34 to $2.39. Three months ago it forecast $2.29 to $2.39.

(Reporting by Juan Lagorio; Editing by Derek Caney and John Wallace)