U.S. personal incomes rebounded sharply in September as Americans collected insurance payments in the aftermath of Hurricanes Katrina and Rita, meanwhile consumer spending turned higher last month.

The U.S. Commerce Department said today that personal income rose at a seasonally adjusted annual rate of 1.7% lin September after falling a revised 0.9% in August. Personal consumption grew 0.5% after an unrevised 0.5% drop in August.

Excluding the effects of the hurricanes, personal income increased 0.5% in September after rising 0.3% in August. Disposable personal income, or income after taxes, increased 1.9%, following a revised 1.1% drop in August which was initially reported as a 0.1% dip.

Spending on durable goods designed to last three years or longer fell 2.3% after an 8.8% drop in August.

Nondurable goods spending rose 1.3% in September, while spending on services increased 0.6%, with the gains in both categories driven by higher energy prices.

The savings rate remained negative. Personal saving as a percentage of disposable personal income was minus 0.4% in September, compared with negative 1.8% in August.