US unemployment fell to its lowest rate in more than five years last month, figures revealed yesterday, giving president George Bush's Republican party a much-needed boost before Tuesday's US mid-term elections.

The monthly payroll report showed the US economy created 139,000 more jobs than previously thought in August and September, and added 92,000 in October.

Unemployment fell from 4.6 per cent to 4.4 per cent, while hourly wages rose 0.4 per cent over the month, making it unlikely that the Federal Reserve would soon consider cutting interest rates.

Bond prices fell sharply, with the yield on the 10-year note rising eight basis points to 4.68 per cent shortly after the announcement.

The dollar strengthened, while stocks moved slightly higher in early trading. Jan Hatzius, chief US economist at Goldman Sachs, said: "This is clearly a stronger than expected report. It shows that the economy is not falling off the rails."

But he warned that unemployment tends to lag behind economic growth and would probably rise in coming months.

The White House seized on the strong jobs report in a late drive to make up lost ground before the elections, which are expected to produce sweeping gains for opposition Democrats in both houses.

A breakdown of the figures showed the service sector created 118,000 jobs in October, with a further 34,000 from government hiring.

The manufacturing and construction sectors combined shed 60,000 jobs.