Gloomy Harbingers: Sales, Factory Use Down Sharply

Business sales plunged 1.8% in May, the biggest decline in 11 years, and the operating rate at the nation’s industries plunged sharply in June, according to two gloomy government reports released today.

The negative readings came as the latest in a recent series of glum economic news.

Sales in May amounted to $420.7 billion, $7.7 billion below the April sales total. It was the largest one-month decline since a record 2.8% plunge in March, 1975, the Commerce Department said.

With sales in a slump, businesses apparently did not want to be caught with too much excess inventory, which is costly to store. Business inventories dropped 0.3% in May, the sharpest monthly cutback since a 0.6% decline in March, 1983.

Meanwhile, the Federal Reserve Board said the nation’s factories, mines and utilities operated at just 78.3% of capacity last month.

The steep decline from 78.9% in May was partly due to strikes in the aluminum, lumber and communications industries.

Today’s statistics provided further evidence of how sluggish the economy has become.

Reagan Administration officials have said they will have to cut their projection for economic growth this year although they still contend that a substantial rebound will occur in the last half of 1986.

Private analysts are beginning to have their doubts, however, after a string of anemic statistics. Many are now forecasting that the economy will show little if any pickup in coming months.