Leading Indicators Climb 0.5% : Economy: Factory orders also rose again in October. Administration subtly discourages Fed from boosting rates.

Government reports issued Friday point to a healthy if not buoyant economy, with signs that solid growth will probably continue into the new year.

The index of leading indicators rose for the third straight month in October, climbing 0.5%, the Commerce Department said. Orders to U.S. factories were also up in October for a third consecutive month, jumping 1.2% as aircraft and auto orders surged.

Together with a sharp drop in unemployment, reported separately by the Labor Department, the signposts were sufficiently rosy to bring top Clinton Administration economic officials out in force. They underscored the positives while subtly discouraging the Federal Reserve Board from boosting interest rates.

“So far, we don’t see anything to suggest that even though the pace of recovery has picked up, underlying inflationary pressures have picked up,” Laura D’Andrea Tyson, chairwoman of the President’s Council of Economic Advisers, said at a news briefing.

Added Deputy Treasury Secretary Roger Altman: “I don’t think we’re anywhere near an overheating situation.”

Nonetheless, some analysts looked for the Fed to fiddle with interest rates to keep the economy from boiling over.

“I don’t think they’ll do much,” said economist David Wyss of DRI-McGraw Hill in Lexington, Mass. “They’ll just remind the markets they’re there. A quarter point around March or April, maybe three-quarters of a point by the end of the year.”

Tyson said the economy should continue to grow at a pace of 3% through the end of next year. Wyss projected a similar rate.

October’s leading index report reflects a change in statistical methods to make the index more forward-looking. Commerce Department officials believe the index will be more accurate, particularly during periods of slow growth.

Among the indicators contributing to the latest upturn were rising consumer confidence, a decline in unemployment benefit applications, a gain in new orders for consumer goods, a rise in prices of raw materials, an increase in contracts and orders for new commercial buildings and business equipment, an advance in the average workweek, a gain in building permits, an uptick in stock prices and an increase in the backlog of orders at factories for durable goods.

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