variable act can be initialized like this:
String act = null;

[snip]

Could change this to
        String act="";
[snip]

You've gotten a few responses that will work, but none that is a good
idea.  Both responses suggested initializing the variable to a nonsense
value, null or "", which the variable should never actually hold.  It's
not a good idea to get into the habit of initializing local variables to
nonsense values in Java.  By doing so, all you do is prevent the
compiler from telling you when you really do forget to initialize
something to a sensible value.

The problem is that you don't have a final else clause in your if/else
chain.  It turns out that you happen to cover all possibilities with if
statements, but that's rather fragile.  There are two choices you could
make:

(1) Remove the last if statement, and make dancing a default:

   if (temp > 85) act = "Swimming";
   else if ((temp > 70) && (temp <= 85)) act = "Tennis";
   else if ((temp > 32) && (temp <= 70)) act = "Golf";
   else if ((temp > 0) && (temp <= 32)) act = "Skiing";
   else act = "Dancing";

(2) Add an explicit else and throw an exception:

   if (temp > 85) act = "Swimming";
   else if ((temp > 70) && (temp <= 85)) act = "Tennis";
   else if ((temp > 32) && (temp <= 70)) act = "Golf";
   else if ((temp > 0) && (temp <= 32)) act = "Skiing";
   else if (temp <= 0) act = "Dancing";
   else throw new RuntimeException("Forgot to specify this acitivity");

If dancing is a sensible default, then (1) causes your application to
continue working even if you mess up a temperature range.  If not, then
(2) at least guarantees that your application fails reliably and
consistently when you've broken things.  In either case, you aren't
lying to the compiler.

I would take a slightly different approach to the other responders to
this thread. I would move declarations down to where they are first
needed. There is a path, which with a bit of effort looks as if in
practice that it is not possible, where act isn't assignable. Putting an
assignment there would suppress the error.

Remove these two lines.

Make this
     int temp = keyboard.nextInt();

The variable name looks as if it is just saying "temporary". A better
name would be something like temperatureFahrenheit. Outside of the US
Celsius is more common. Kelvin is often used in science and engineering
areas. Also "action" is probably better than "act".

We will need to declare act here. If we declare it final, then we can be
sure that there will be exactly one assignment.

        final String act;

If we slide in a further else statement, we can ensure that act is
"definitely assigned". There is a whole chapter on definite assignment
in the Java Language Specification, which isn't quite as dull as it
sounds. Essentially a variable is definitely assigned if all execution
paths definitely assign it, but the compiler does not check for tautologies.

So:

       else {
           act = "Unknown";
       }

Alternatively we could indicate that reaching that point is an error, with:

       else {
           throw new Error(
               "Unexpected execution path (temp="+temp+")"
           );
       }

Rather than redundantly checking each range, a better way to state this
particular logic is with something like:

    String act =
        (temp <=  0) ? "Dancing" :
        (temp <= 32) ? "Skiing"  :
        (temp <= 70) ? "Golf"    :
        (temp <= 85) ? "Tennis"  :
                       "Swimming";

The parentheses aren't strictly speaking necessary but, as inequalities
are not common (unlike ==null) in this position, I feel it worthwhile.

Tom Hawtin