WASHINGTON -- American consumers stepped up their spending last month, a good sign for the holiday shopping season.

The Commerce Department said Friday that consumer spending rose a sharp 0.6 per cent from October, outpacing a 0.3 per cent increase in personal income. As a result, the savings rate fell to 2.9 per cent of after-tax income in November, lowest since November 2007.

The numbers bode well for the holidays and for the overall economy: Consumer spending accounts for about 70 per cent of U.S. economic output.

Spending on both goods and services rose in November, led by increases in purchases of recreational goods, vehicles electricity and gas.

The savings rate has been falling steadily since February when it was at 4.1 per cent.

The measure of inflation favoured by the Federal Reserve remained subdued, rising 1.8 per cent in November from a year ago, 1.5 per cent excluding volatile energy and food prices. Inflation is running below the Fed's 2 per cent annual target, but the central bank is still confident enough in the economy to have raised interest rates three times this year.

The overall U.S. economy has looked solid. Growth clocked in at an annual pace of 3.2 per cent in the third quarter and 3.1 per cent in the second. Unemployment has dropped to a 17-year 4.1 per cent, helping boost consumer confidence.