New orders for costly manufactured goods rebounded strongly in November and Americans' incomes continued to rise, the government said yesterday in separate reports, suggesting that the U.S. economy is closing the year with undiminished vigor.

The Commerce Department said personal income rose 0.4 percent after a 1.3 percent jump in October, helped in both months by farm subsidies and signing bonuses in the manufacturing sector.

Personal spending rose 0.5 percent as consumers geared up for the holiday season.

Analysts had expected a more modest 0.2 percent rise in incomes, while the increase in spending matched market forecasts.

Consumer spending, a key engine behind the economy's nearly nine-year-old expansion, has risen every month for more than 2 1/2 years. The department also said the value of total new orders for durable goods rose 1.2 percent in November, bouncing back after two straight months of declines.

The increase--the biggest since a 4.3 percent surge in July--was driven by a rebound in electronic and electric goods and came despite a drop in aircraft orders.

Wall Street analysts had expected durable goods orders to rise 1.1 percent.

Durables are goods such as cars and refrigerators that are meant to last at least three years. Though volatile, durable-goods orders are an important gauge of the health of the nation's manufacturing sector, which had suffered most of last year from the effects of the Asian financial crisis.

"It shows manufacturing is in the midst of a recovery," said Phil Hill, an economist at Briefing.com. "We saw a couple of weak months and now we're seeing a rebound."

Financial markets reacted with little surprise to the news, which reinforced a widely held belief that the Federal Reserve will raise key interest rates early next year in an effort to keep the booming economy from overheating.

Inflation-sensitive bond prices opened higher in thin pre-holiday trading, but soon declined. Stock prices were up sharply by late morning, driven by technology issues.

"It's just another piece [of data] to push the Fed to move rates higher next year," said Stuart Hoffman, chief economist at PNC Bank Corp. in Pittsburgh.

The Fed left rates unchanged at a policy meeting earlier this week but suggested it would reassess its stance at its next session in early February, after the economy has safely entered the new year.

The Commerce Department report said orders for electronic and other electrical equipment soared 8.7 percent in November after a 7.4 percent drop in the previous month. But orders for transportation equipment fell 2.1 percent after October's 0.7 percent gain as aircraft orders declined, it added.

Excluding transportation, durable goods orders rose 2.2 percent in November after a 1.4 percent drop in October, the department said.

Taken together, the two reports pointed to an economy in high gear, with vigorous orders for durable goods expected to spill over into 2000 and consumer spending continuing to drive the economic expansion.

"Nineteen ninety-nine is ending with a spending bang, making it the Year of the Consumer," said Ken Mayland, chief economist of KeyCorp in Cleveland.

In a third report, the Labor Department reported that the number of people making new claims for state unemployment benefits rose by 14,000 last week to 281,000 from a 26-year low the previous week. First-time claims have been below the key 300,000 level for the past 11 weeks, an indication that the labor market remains tight.