Non-farm, private employment increased by 40,000 in May on a seasonally-adjusted basis, ADP announced Wednesday in the ADP National Employment Report. (pdf)

Meanwhile, the April 2008 estimated change in employment was revised up 3,000 to a gain of 13,000 jobs, ADP (NYSE: ADP) said.

The service sector of the economy added 77,000 jobs, while employment in the goods-producing sector declined 37,000 - - its 18th consecutive monthly decline.

Most of the decline in employment during May was accounted for by job losses at large companies, which registered an 18,000-job decline. Meanwhile, small businesses added 61,000 jobs and medium-sized business cut 3,000 jobs.

Conditions in two economic sectors hard hit by the slumping housing sector - - construction and financial activities - - continued to deteriorate. Construction employment fell 13,000 - - its 18th consecutive monthly decline - - bringing the total decline in construction jobs since the peak in August 2006 to 298,000. Employment in financial activities declined 5,000, its third straight monthly decline.

Economic Analysis: In general, a surprisingly upbeat ADP job report. The 40,000 job gain wasn't nearly enough to keep unemployment from rising, but at least it wasn't a decline. However, economists caution that one should not read too much into the monthly ADP job report, due to its limited scope (private sector payrolls). The more-telling indicator is the U.S. Labor Department's monthly payroll statistic, and May 2008's data will be released Friday at 8:30 a.m. EDT. That report is expected to show a 60,000-job decline, according to a Bloomberg News survey of economists.