Incomes Rise but Economy Still Sluggish : Indicators: July figures show consumers are being cautious. Inventories remain high.

WASHINGTON — Consumers got a healthy boost in their incomes during July, the Commerce Department said Thursday, but their spending restraint kept manufacturing activity sluggish because of high inventories.

A series of reports released on the eve of a key employment report showed spending is leveling off and prompted new speculation that the Federal Reserve Board is poised for another interest rate cut.

In economic news Thursday:

* Consumer incomes rose 0.7% to a seasonally adjusted annual rate of $6.06 trillion in July--the best monthly increase since a 0.8% rise last January, the Commerce Department said. But spending rose just 0.2% to $4.89 trillion.

* The department said factory orders for manufactured goods fell 1.3% in July, the fifth decline in the past six months, and shipments of finished products weakened from June.

* A report from Salomon Bros. said its index for sales at stores open at least a year, or same-store sales, rose just 1.5% in August compared to a 4.9% climb last year. Hot weather contributed to the disappointing sales performance, Salomon said.

* Chicago-area purchasing managers said their business barometer eased to 49.3 in August from 49.7 in July. That is a third consecutive month in which it remained under the critical 50% level that signals a slowing manufacturing economy.

* The Labor Department said new claims for unemployment pay held steady at 349,000 for the week ended Aug. 26, the same as the week before.

Analysts will be watching closely today for any signs of a weakening job market when the Labor Department announces its employment report for August.

The new evidence of slow economic growth came just one day after the government reported that the economy this spring turned in its weakest performance in nearly four years, expanding at a 1.1% annual rate.

Thursday’s figures suggest that consumers were becoming more cautious.

Analysts said that prospects for a pickup in the economy are brightening as stocks of unsold goods that piled up in the spring have been sold off in the current quarter.

“The economy, from the composite of these indicators, shows signs of gradually improving, even though the manufacturing sector still is struggling as it works off its excess inventories,” said economist Lynn Reaser of Los Angeles-based First Interstate Bancorp.

Stronger July incomes were attributed to a 60,000-job increase in service employment last month and to higher average earnings and a longer workweek.

Gains in personal income, which includes wages and salaries and income from dividends, interest and businesses, are needed to fund consumer buying, which fuels two-thirds of national economic activity.

Spending rose just 0.2% to a seasonally adjusted annual rate of $4.89 trillion. Consumers put some of the extra money into savings, socking away 4.2 cents out of each dollar earned in July, compared to 3.8 cents in June.

Spending on durable goods fell to an annual rate of $622 billion from $633.1 billion in June, mainly because of weaker sales of new cars, and spending on non-durables and services rose.

Factories paid a price in terms of weaker orders during July for consumers’ spending restraint. The Commerce Department said there were big drops in demand for transportation goods and machinery.

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Personal Income

Seasonally adjusted annual rate, in trillions of dollars:

July 1995: $6.06

Source Commerce Department

Personal Spending

Seasonally adjusted annual rate, in trillions of dollars:

July 1995: $4.89

Source Commerce Department