By Dan Burns

(Reuters) -Hiring by U.S. private employers slid to a four-month low in May, with small firms reducing staff, and wage gains for job changers moderated for a second month, according to a report on Wednesday that added to signs the job market is cooling.

Private payrolls increased by 152,000 jobs last month - the fewest since January and well below the average of 194,000 over the past year - after rising by a downwardly revised 188,000 in April, the ADP Employment report showed. Economists polled by Reuters had forecast private employment increasing by 175,000 last month.

Gains were led for a second straight month by the largest employers, with those having payrolls of 500 or more workers adding 98,000 people, about the same as the month before. Mid-sized companies employing between 50 and 499 workers added 79,000 jobs compared with 59,000 in April.

Growth was concentrated in the services sector, led by trade, transportation and utilities, followed by education and financial services. Leisure and hospitality companies added 12,000 jobs, the fewest since that industry shed jobs in November.

Meanwhile, firms employing fewer than 50 workers cut 10,000 jobs, the first reductions in that closely watched sector since November, and manufacturers shed 20,000 jobs, the most since July.

The report was the latest indication that employment growth is moderating, but the job market is not fully buckling under the weight of 525 basis points of interest rate increases from the Federal Reserve since March 2022, although other data has shown the job market is coming into better balance.

On Tuesday, the Labor Department reported job openings fell in April to the fewest in more than three years and the ratio of vacancies to the number of unemployed persons had returned to levels seen prior to the COVID-19 pandemic outbreak in early 2020.

The ADP report, jointly developed with the Stanford Digital Economy Lab, also precedes Friday's more comprehensive and closely watched nonfarm payrolls report for May from the Bureau of Labor Statistics.

Economists polled by Reuters expect the BLS data to show 170,000 private-sector jobs were created last month, little changed from April's 167,000, while total payroll growth is estimated at 185,000 versus 175,000 in April. The unemployment rate is forecast unchanged at 3.9% and annual wage increases holding steady at 3.9%.

ADP reported wage growth moderated for job changers for the second month to 7.8% year-over-year, and pay increases for those remaining in their current job was unchanged for a third straight month at 5%. The education and leisure and hospitality industries saw above-average increases for job stayers at 5.5%.

Fed officials are keeping close tabs on wage growth because services inflation, which has proven more difficult to tame in the central bank's drive to return overall inflation to its 2% target, is influenced more heavily by firms' wage costs.

The Fed meets next week on June 11-12 and is expected to keep the benchmark overnight lending rate steady in the target range of 5.25%-to-5.50% where it has been since July. Policymakers will also update their projections for economic growth, unemployment and inflation and will pencil in what they see as the appropriate policy rate for the near and longer term.

In March they had projected rates by the end of this year would be 75 basis points lower than now, but stiffer-than-expected inflation to start the year has changed policymakers' commentary since then, with virtually all of them saying they need to see firmer evidence of inflation slowing sustainably toward 2% before they would agree to pivot to rate cuts.

Interest rate futures markets on balance now project no more than 50 basis points of easing this year, with a first rate cut of 25 basis points seen coming in September.

(Reporting By Dan Burns; Editing by Chizu Nomiyama)