The nation's manufacturing activity slowed in July for the second month in a row, reflecting the pinching effects of the Asian financial crisis and the General Motors strikes.
In another economic report Monday, the National Association of Purchasing Management reported that its monthly index of business activity fell to 49.1 percent last month from 49.6 percent in June.
A reading below 50 is a sign of a contraction in the industrial sector of the U.S. economy.
The 0.2 percent increase in income was the lowest since April 1997 and a lower number has not been seen since November 1994.
Disposable current income also rose 0.2 percent during the month, the government said.
Private economists were looking for increases of about 0.5 percent for both spending and incomes.
The report will probably not move the markets much, because most of the data was included in last Friday's report on second-quarter gross domestic product.
The government said wages and salaries rose $4.4 billion in June compared with $23.6 billion in May. The impact of the strike against General Motors was felt in a $3.8 billion decline in payrolls at goods-producing industries. The strike accounted for about $2 billion of the decline, the government said.
Distributive industries' payrolls fell $2 billion. Service industries' payrolls rose $10.2 billion.
Proprietors' income increased $3.1 billion, as did transfer payments. Personal interest income rose $1.2 billion while rental income rose $2.2 billion. Dividend income increased $200 million. The government has redefined personal dividend income to exclude capital gains distributions from mutual funds to match treatment of other capital gains income.