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Economy picking up steam

Consumers lead way, increasing spending 0.7%

WASHINGTON -- The US economy is gaining momentum, bolstered by home building, shipping, and even the beleaguered manufacturing sector, the Federal Reserve said yesterday in a newly upbeat assessment.

The Commerce Department said consumer spending shot up 0.7 percent in October, the best showing since July, as Americans' incomes, the fuel for future spending, rose 0.6 percent.

The gain in incomes reflected the big increase of 337,000 payroll jobs in October, the best in seven months.

Meanwhile, the Institute for Supply Management reported its main index for measuring industrial activity performed better than expected, rising to 57.8 in November from 56.8 in October.

The Federal Reserve said reports from its 12 regions "generally paint a picture of continued economic growth" from mid-October through mid-November with improvements noted in a number of areas.

In fact, the Fed survey said 11 of its 12 regions, including New England, reported expanding economic activity with only the Cleveland Fed district seeing little change.

The Boston Fed said that retailers in the region saw mixed results in October and early November, although tourism continued to improve. Manufacturers reported business continued to pick up. Demand for temporary workers expanded, and commercial real estate markets remained sluggish.

The Fed's latest beige book, named for the color of its cover, will be used when policy makers meet for their last discussion of the year on Dec. 14. It is widely expected the Fed will raise interest rates for a fifth straight time this year in an effort to make sure the rebounding economy does not trigger unwanted inflation.

Analysts said the 0.7 percent jump in consumer spending after a strong 0.6 percent rise in September showed that consumers, who account for two-thirds of total economic activity, were getting a second wind.

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