The U.S. economy added jobs at a much stronger-than-expected pace in October, while the unemployment rate moved lower as the labor market showed surprising strength.

Nonfarm payrolls increased by a seasonally adjusted 165,000 for the month, compared with the Dow Jones estimate for 59,000, the Bureau of Labor Statistics reported Friday.

The unemployment rate nudged down to 4.1%, compared with the forecast for 4.2%. A more encompassing measure that includes discouraged workers and those holding part-time jobs for economic reasons rose to 7.9%, up 0.3 percentage point, amid an increase of 421,000 in the civilian labor force.

In addition to the strong payroll gains for October, prior months were revised up substantially: The August figure moved to 186,000, an upward revision of 53,000, while the September count shifted to 60,000 following an upward revision of 31,000.

"You have to look pretty hard to find something to dislike in there," Dan North, senior economist at Allianz Trade North America.…