Personal Income Increases for 6th Consecutive Month : Economy: Although growth is anemic, the savings rate is higher. Analysts still see nation in a half-speed recovery.

A healthy 0.6% increase in personal income allowed Americans to save more in May, the government said Thursday, a signal of modestly improving economic prospects.

The increase, to a seasonally adjusted annual rate of $5.3 trillion, was the sixth consecutive gain in personal income and would have been even stronger if not for a second consecutive decrease in federal farm subsidies, the Commerce Department said.

The report fit with analysts’ belief that the economy is rebounding moderately, albeit unevenly, after growth as measured by the gross domestic product slumped to an anemic 0.7% annual rate in the first quarter.

“This has been a half-speed recovery. . . . However, it is still an ongoing recovery and it’s generating enough new jobs and income to keep consumer spending expanding,” said economist Sandra Shaber of the WEFA Group, a forecasting firm in Bala Cynwyd, Pa.

Personal consumption spending rose a slight 0.2% in May to a seasonally adjusted annual rate of $4.29 trillion. But that followed a 1.2% surge in April.

In May, the combination of a healthy gain in income and a small rise in spending produced an increase in the savings rate--savings as a percentage of income--to 4.8% from 4.4% in April.

“Consumers are trying to break some bad habits. They didn’t spend more than they took in, and that’s a pleasant change,” said economist Bruce Steinberg of Merrill Lynch.

The May advance in incomes followed a paltry 0.1% increase in April.

Excluding two special factors--farm subsidies and the reverberating effects of the mid-March storm on the East Coast--income would have been up 0.8% in May and 0.4% in April.

Despite the recent improvement in some economic numbers, progress in the job market remains slow. The Labor Department said Thursday that new applications for unemployment insurance totaled 353,000 last week, the highest level in nine weeks and up 8,000 from the week before.

Employers generally have been cautious this year, preferring to work existing employees longer hours rather than add to payrolls.

The White House used the numbers to promote President Clinton’s deficit-reduction plan, saying it would keep interest rates low and bolster the economy.

“The economy is not performing the way we would want it to,” White House spokeswoman Dee Dee Myers said.

Nevertheless, the most watched component of income--wages and salaries--rose a strong 1% in May to a seasonally adjusted annual rate of $3.04 trillion after a 0.4% gain in April.

Farm income was down in May. Transfer payments, such as unemployment benefits, increased. Most of the gain came in Social Security checks. Non-farm business owners’ income rose.

Real disposable income--inflation-adjusted income after taxes--rose 0.4% in May after a 0.2% drop the month before.

Consumer spending, meanwhile, increased 0.7% for durable goods, big-ticket items expected to last at least three years.