WASHINGTON – Consumers spent briskly in October, manufacturers gained ground in November, and the business climate showed improvements during the period – encouraging signs that the last quarter of this year is shaping up nicely.

The Commerce Department reported yesterday that consumer spending went up by 0.7% in October, up from 0.6% rise in September and the best showing since July.

Growth in Americans’ incomes – the fuel for future spending – jumped by 0.6% in October as the employers added significantly to payrolls. That compared with a 0.2% advance in September and marked the biggest increase since May.

A separate report suggested that manufacturing activity accelerated in November.

The Institute for Supply Management reported that its main index for measuring industrial activity rose to 57.8 in November, a full point above the level of 56.8 in October. Last month’s performance exceeded analysts’ forecasts for a reading of 57 and comes after three months of slowing in the rate of manufacturing growth.

“We are seeing a renewal of vigor in the factory sector,” said the chief economist at RBS Greenwich Capital, Steve Stanley.

A reading of 50 or above means that manufacturing activity is expanding, while a figure below 50 suggest that the sector is contracting.

Separately, the Federal Reserve, in a survey of business conditions around the country, said 11 of its 12 regions reported expanding activity from mid-October through mid-November, bolstered by strength in manufacturing. Only the Cleveland district reported little change in economic activity during the survey period.

On the consumer front, the latest numbers also were better than economists expected. They were forecasting a 0.4% rise in consumer spending and a 0.5% increase in income growth.

“Consumers were not deterred by higher oil prices and by consumer confidence numbers that keep on going lower,” said the president of ClearView Economics, Ken Mayland. “I got to believe this gets the fourth quarter off on very solid footings.”

The spending and income figures are not adjusted for price changes.

When adjusted for inflation, consumer spending rose by a more moderate – but still healthy – 0.3% in October.

The Federal Reserve, wanting to make sure inflation doesn’t become a problem for the economy, is expected to boost interest rates for a fifth time this year on December 14.

An inflation gauge tied to the consumer spending and income reports showed that prices rose 0.4% in October, up from a tiny 0.1% increase in September.

In other economic news, construction spending was virtually unchanged in October from the previous month at a seasonally adjusted annual rate of $1.01 trillion, a record high. Analysts were expecting a 0.7% rise.

The economy grew at a solid 3.9% pace in the third quarter as consumers and businesses spent more freely. Before yesterday’s reports, some analysts said growth in the current October-to-December quarter could slow a bit, while others thought it could be slightly stronger.

A Business Roundtable survey of top executives suggested the economy will continue to grow at a healthy pace in the first half of next year. “CEOs are forecasting continuing solid growth with a slight easing from the robust growth of 2004,” said Pfizer’s chief executive, Hank McKinnell.

Consumers’ resiliency has amazed economists. Analysts said they’ll be watching consumers closely to see the extent to which sinking consumer confidence, high energy prices and a job market still recovering from the 2001 recession affect their buying behavior.

Spending by consumers accounts for roughly two-thirds of all economic activity in America. Thus their buying appetite is an important factor in determining the strength of economic growth.

Wednesday’s report showed that consumer spending on big-ticket “durable” goods such as cars, rose 0.2% in October, down from a 1.2% gain in September.

Spending on nondurable goods, such as food and clothing, jumped 1.5% in October, compared with a 0.8% increase in the prior month. Spending on services rose 0.5% in October, up from a 0.4% gain. The figures are not adjusted for prices changes.

The Bush administration credited the president’s tax cuts with helping the economy rebound. But Democrats counter that the tax cuts mainly helped the wealthy and plunged the government’s balance sheets deeper into the red.

With consumer spending outpacing income growth in October, the personal savings rate – savings as a percentage of after-tax income – dipped to 0.2%, the lowest in three years.