Nov. 2 (Bloomberg) -- American employers added almost twice as many jobs as forecast in October, helping steer the economy clear of recession even as the housing slump deepens.

Payrolls climbed by 166,000 after a 96,000 increase in September, the Labor Department said today in Washington. The jobless rate held at 4.7 percent.

The resilient labor market suggests the Federal Reserve is unlikely to lower borrowing costs again next month, economists said. The central bank lowered the benchmark rate by a quarter point on Oct. 31 and signaled it's reluctant to do so again.

``The labor market continues to be inconsistent with fears of a recession,'' said Dean Maki, chief U.S. economist at Barclays Capital in New York and a former senior economist at the Fed. ``This report will increase the Fed's conviction that it should keep rates unchanged in coming months.''

Treasury notes fell after the report, before paring their decline. The dollar strengthened against the euro in the minutes after the figures were released, before erasing its gains. Stocks were little changed.

Economists surveyed by Bloomberg News had anticipated an increase of 85,000 in payrolls during the month, according to the median of 86 estimates, compared with an originally reported gain of 110,000 in September.

Estimates for unemployment ranged from 4.6 percent to 4.9 percent. The rate dropped to 4.4 percent in March, matching the October 2006 level as the lowest in five years.

Factory Payrolls Shrink

Factory payrolls decreased by 21,000 after felling 17,000 a month earlier. Economists had forecast a drop of 15,000 in manufacturing employment.

Auburn Hills, Michigan-based Chrysler LLC yesterday said it will cut as many as 11,000 more hourly and salaried jobs through next year. The third-largest U.S.-based automaker said the prospects for auto sales have deteriorated since announcing in February that it would cut 13,000 positions over three years.

``We have to move now to adjust the way our company looks and acts to reflect a smaller market,'' President Tom LaSorda said in the statement.

Payrolls at builders fell by 5,000 after dropping 14,000 a month earlier.

Service industries, which include banks, insurance companies, restaurants and retailers, added 190,000 workers last month after gaining 127,000 jobs in September. Retailers cut 21,500 jobs after eliminating 12,300 in September.

Government payrolls expanded by 36,000 during the month after rising 23,000 in September.

Wage Increases

Wages rose less than forecast, suggesting compensation may provide less of a cushion against declining home values in coming months. Hourly wages rose 3 cents, or 0.2 percent, on average to $17.58 in October and were up 3.8 percent from a year earlier. Economists had expected a 0.3 percent increase for the month and 4.0 percent for the 12-month period.

Average weekly hours worked by production workers held at 33.8. Average weekly earnings rose to $594.20 last month from $593.19 the prior month.

In contrast to the payrolls figures, a separate household survey showed a loss of jobs. The unemployment rate held steady because about 200,000 people left the workforce.

Fed policy makers on Oct. 31 cut the interest-rate target for loans between banks by a quarter percentage point to 4.50 percent after trimming the rate by a half point in September.

Fed's Outlook

The reductions ``should help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets,'' the Federal Open Market Committee said in a statement.

Policy makers also said that while ``strains in financial markets have eased somewhat,'' economic growth will probably slow as the housing slump intensifies.

The economy will probably expand at a 1.8 percent pace this quarter, based on a Bloomberg survey of economists last month, less than half the third quarter's 3.9 percent rate.

Economists project the jobless rate will rise in coming months as slower growth forces more businesses to reduce staff. Unemployment will probably increase to 5 percent by the second half of next year, the survey showed.

Not all companies are worried demand will slacken. Honda Motor Co. said last month it may double North American production of its compact CR-V, the best-selling sport-utility vehicle in the U.S. Honda began building CR-Vs in East Liberty, Ohio, late last year after previously importing them from Japan and the U.K.

To contact the reporter on this story: Joe Richter in Washington Jrichter1@bloomberg.net

Last Updated: November 2, 2007 09:45 EDT