WASHINGTON | Mon Jan 30, 2012 12:06am EST

(Reuters) - Small business payrolls grew at a slower rate in January and wages fell, an independent survey showed on Monday, suggesting the pace of overall job growth moderated after December's sturdy gain.

Small businesses added 50,000 jobs, payrolls processing firm Intuit said, compared with a gain of 60,000 in December. Still, labor market conditions continue to improve.

"Overall the small business labor market is not weak, but not strong either," said Susan Woodward, the economist who developed the survey. "Small business employment continues to rise but at a rate that will not get us back to full employment very quickly."

The government's more comprehensive employment report due on Friday is expected to show nonfarm payrolls increased 150,000 in January, according to a Reuters survey, after rising 200,000 the prior month.

The unemployment rate is seen steady at a near three-year low of 8.5%.

The Intuit survey is based on responses from about 72,000 small businesses with fewer than 20 employees that use the Intuit Online Payroll system. It covered the period from Dec. 24, 2011, to January 23.

The average monthly salary for small business employees fell 0.1%, or $3, to $2,632 in January. The average workweek eased 0.1% to 24.8 hours.

(Reporting By Lucia Mutikani; Editing by Leslie Adler)