The nation's small cities and towns are having difficulty keeping their young people from moving to big cities, and say that their biggest problem is attracting industry and jobs to retain young people, the National League of Cities reported yesterday.

Two of five communities said small-business closings and farm foreclosures had worsened, and a third said unemployment was increasing, the survey found.

The survey of 395 communities with populations under 50,000 found that 55 percent said the elderly were a growing segment, and 26 percent said they were experiencing problems keeping young people. Only 2 percent said the proportion of old people was declining.

"The loss of young people is bad news for any community, and it is a situation that points to other problems down the road if it cannot be stabilized," said league Executive Director Alan Beals. "If these are cyclical events, and there are some signs that things have bottomed out, then we can hope that jobs and farms will rebound, and that fewer people will migrate elsewhere."

More than half of the municipalities reported that expenditures were likely to outpace revenues this year and said that last year's cutoff of the federal general revenue-sharing program was likely to reduce money available for improvements such as road repairs.

Since local governments usually are prohibited from creating deficits, the difference must be made up by dipping into reserves, making additional cuts in expenditures or imposing new taxes or fees.

Despite these problems, however, many community officials are learning to make adjustments and to carry on with less money, Beals said.

More than 40 percent of municipalities said their ability to attract businesses and jobs had improved, and 37 percent said overall economic conditions were better. About 33 percent said housing availability and affordability were improving.

"While many cities and towns were hard hit by the loss of revenue sharing, they continue to provide a broad range of basic services to their citizens, although often at reduced levels," Beals said. "They are working harder than ever to strengthen their local economic base, to attract businesses and to create jobs."

On the most pressing issue confronting them, communities most often cited the ability to attract industry and jobs. Next most frequently mentioned were problems with streets and sidewalks, followed by overall economic conditions and unemployment.

Mayor Art Ashley of Nitro, W.Va., chairman of the league's Small Cities Council, said the results suggest that municipal officials are placing top priority on creating local opportunities.

"There is strong concern about maintaining the stability and character that is so valuable and so special in smaller communities," Ashley said. "Losing young people means losing the next generation of leadership, and each business that closes or farm that goes on the auction block is likely to create hardships throughout the community."