  We demonstrate a light-shot-noise-limited magnetometer based on the Faraday
effect in a hot unpolarized ensemble of rubidium atoms. By using off-resonant,
polarization-squeezed probe light, we improve the sensitivity of the
magnetometer by 3.2 dB. The technique could improve the sensitivity of the most
advanced magnetometers and quantum nondemolition measurements of atomic spin
ensembles.
