Americans' personal income rose strongly in June, helped along by gains in wages and subsidy payments to farmers, but consumers pulled back a little from their frenzied spending pace of earlier this year, the Commerce Department reported yesterday.

Incomes surged 0.7 percent last month, their strongest performance since late last year, while spending rose 0.3 percent. Wages alone rose 0.5 percent. Still, with individuals spending at a rate greater than the rise in their incomes for much of the year, that left the country with a negative savings rate, of minus 1.0 percent, in June, up from the record of minus 1.4 percent set in May.

The income and spending reports, along with two others that showed new-home sales up 3.1 percent in May and Midwest manufacturers reporting improved business conditions, painted yet another picture of an economy showing remarkable momentum in its ninth year of expansion.

"Overall, you're seeing a strong economy with a lot of demand growth," said Suzanne Rizzo, an economist at Maria Fiorini Ramirez Inc. in New York.

Rizzo said she doubted the economy will cool measurably until the Federal Reserve raises interest rates again, possibly as early as next month, when its policymaking committee meets.

While many financial market economists believe the Fed will have to raise rates again this year, other Fed watchers think the data still show little of the inflationary pressure that would suggest a need for higher rates. For example, an inflation indicator tied to consumer spending was unchanged for the second month in a row, the department reported.

"Pricing pressure was essentially absent in June," said Lynn Reaser, economist at Bank of America Private Bank in Jacksonville, Fla. "The good news is that productivity gains continue to offset the gain in wages."

The news yesterday followed Thursday's government report that the nation's gross domestic product grew more slowly in the second quarter, which heartened some economists. But that report was tempered by a stronger-than-expected rise in an index that measures trends in wages and benefit costs, which roiled financial markets. The stock markets fell again yesterday as investors once more became convinced that the Fed will have to raise short-term rates another quarter percentage point, as it did last month.

Economists remain split on whether the latest data show any meaningful slowdown in the economy or foreshadow any increase in inflation. Fed Chairman Alan Greenspan has indicated that the Fed stands ready to act forcefully at the first glimpse of inflation, but so far there has been little evidence of that.

Still, financial markets are likely to remain volatile until further economic data clarifies the issue.

The income growth was above expectations, but when the effects of federal payments to farmers are subtracted, the increase in wages and salaries of 0.5 percent was in line with most estimates.

The 0.3 percent rise in spending, meanwhile, was the lowest since January. Some economists said the pullback from extremely strong consumer spending in May reflected some moderation in the pace of automobile sales, which had been running at record levels.

The income numbers are closely followed by economists and the markets because consumer spending accounts for roughly two-thirds of all domestic economic activity. The American consumer has been the main propellant behind the stellar performance of the U.S. economy in recent years, offsetting the drag from weak foreign economies.

With many Asian economies showing signs of rebounding, some U.S. economists worry that continued consumer strength would fuel such heated demand for goods and services that it would drive up prices or wages.

So far, though, all the economic reports show the growth continuing but without the expected pressure on prices or wages. This means businesses are finding ways to squeeze even more productivity out of their workers, or to cut costs for their products enough to counter any rise in labor costs.

"We're not talking about a runaway economy," said Northern Trust economist Robert Dederick. "But any thoughts that the economy is running out of steam seem to be somewhat premature."