Economy Still Weak, Latest Figures Show

WASHINGTON — U.S. industrial production sank 0.5% in June while retail sales advanced only 0.2%, the government said today in separate reports providing further evidence of how weak the economy has become.

The decline in industrial production was the fourth in the last five months, Federal Reserve Board said. It followed a 0.4% drop in May and left industrial output 2.1% below where it was in January.

The Fed blamed half the June drop on strikes that affected output of communications equipment, construction supplies and other durable materials.

The June retail sales gain, to $118.7 billion, was the smallest one in three months, the Commerce Department said. It followed a 0.7% gain in May and a 0.9% advance in April.

Auto Sales Boost Figures

Without a small, 0.8% rise in auto sales, total sales would have shown no improvement last month, the department said.

Economists have said that sluggishness in industrial America and weaker-than-expected consumer spending have restrained overall economic growth.

“We feel the strength of consumer spending should help spur production in the months ahead to meet current high sales levels,” White House spokesman Albert Brashear said in a statement.

Optimists in the Administration believe an upsurge in spending powered by low interest rates, low inflation and high consumer confidence will boost the annual rate of economic growth to as high as 4% by the end of this year.

2% Growth Rate Seen

Many outside the White House, however, believing the economy is drifting into doldrums, say slack income growth, a high level of personal debt and a low savings rate will hold back spending in the second half and trim the annual growth rate to as low as 2%.

The output index for American factories, mines and utilities last advanced in April, by 0.6%.

Retail business has expanded by 4.3% in the first half of 1986, compared to a 5.8% gain in the first six months of 1985.

Auto sales’ 0.8% June gain followed advances of 5.3% in April and 2.3% in May. Service station sales advanced 1.2% as gas prices edged up but have declined by 13.8% since June, 1985.

Retail Sellers Barely Up

Grocery and department store sales both rose by 0.3%, but building materials sales declined by 1.2% and the sale of home furnishings fell 0.7% in June.

Following a pattern that set in after the collapse in world oil prices early this year, the decline in industrial production was steepest in the mining industry, which suffered a 1.5% drop in output in June following a revised 1.7% fall in May.

Mining industry output last month was 10.6% lower than it was in June, 1985.