Private payroll growth in August slowed to its weakest level since October as the U.S. economy continued to move toward full employment, ADP and Moody's Analytics reported Thursday.

Companies added 163,000 jobs for the month, a considerable slowdown from the 217,000 added in July and well below what had been an average of 206,000 a month. Economists surveyed by Reuters had been expecting 190,000 new hires.

August saw a sharp decline in small business hiring that held down the headline number. Still, officials involved with compiling the report said the jobs market remains strong.

"Although we saw a small slowdown in job growth the market remains incredibly dynamic," Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said in a statement.

Small businesses, with fewer than 50 employees, added just 19,000 positions in August, while medium-sized firms of 50 to 499 workers led the way with 111,000 additions.

Companies with more than 500 workers added just 31,000 positions, a function of pressure from tariffs, according to Mark Zandi, chief economist at Moody's Analytics.

"The trade war is having an impact on large companies," Zandi said on CNBC's "Squawk Box." "They're starting to become more cautious in their hiring."

At a sector level, service providers contributed the bulk of the jobs with 139,000 thanks to a big boost from professional and business services (35,000) and education and health services (31,000). Leisure and hospitality also contributed 25,000, followed by trade, transportation and utilities with 21,000.

On the goods-producing side, manufacturing saw 19,000 new jobs and construction added 5,000 workers.

""The job market is hot," Zandi added in the release. "Employers are aggressively competing to hold onto their existing workers and to find new ones. Small businesses are struggling the most in this competition, as they increasingly can't fill open positions."

The report comes a day ahead of the closely watched monthly nonfarm payrolls report from the Bureau of Labor Statistics. Economists also are expecting that number to show a gain of 190,000.

The jobs market has gotten increasingly tight in recent months, with openings outnumbering those considered unemployed for the first time.