Why is market equilibrium pareto efficient?
A situation can be Pareto efficient without also being a Pareto improvement over every other situation.

So, here for example, equilibrium is Pareto efficient, but -- as you have noted -- is not a Pareto improvement over every other situation.



Example. Say I have 100 apples to divide between A and B. The allocation (60, 40) is Pareto efficient, but it is not a Pareto improvement over the allocation (59, 41).