Leading Indicators show a strong gain for March

WASHINGTON (AP) The government's main forecasting gauge offuture economic activity posted another strong gain in March as theeconomy continued to send signals of a coming rebound in growth.

The Commerce Department said yesterday that its Index of LeadingIndicators rose 0.5 percent last month, following an even more robust0.9 percent February increase.

The February performance was revised up from an originallyreported 0.7 percent advance.

The biggest economic factor pushing the index up was the surgein stock prices during March, a month when the stock market soared torecord heights.

With the latest advance, the 10th in a row without a decline,the leading index now stands at 176.6 percent of its 1967 base.

The strong gains in the past two months have given analysts hopethat the economy will rebound substantially in the second half ofthis year following two years of sluggish growth.

They base this hope on a belief that a dramatic plunge in oilprices, the lowest interest rates of this decade and a weaker dollarwill all contribute to stronger growth in the U.S. economy.

The government reported two weeks ago that the economy, asmeasured by the gross national product, was expanding at an annualrate of 3.2 percent in the first three months of the year.

While this growth rate was four times faster thanOctober-December activity, many analysts discounted the rise, sayingit was based primarily on a temporary improvement in the country'sforeign trade performance.

Many analysts are looking for growth to weaken again in thecurrent April-June quarter as cutbacks in auto sales and productionand weak trade numbers hold back over-all activity.

"We are in a sluggish period right now. The lower oil pricesare hurting as much as they are helping, particularly with layoffs inthe energy industries," said Joseph Hurd, senior economist at CrockerNational Bank in San Francisco.

Hurd predicted growth in the first six months of the year would average around 2.5 percent,little better than the weak 2.2 percent rate turned in for all of1985.

But by the final six months of the year, Hurd predicted theeconomy would be expanding at close to a 4 percent annual rate.

Kathleen Cooper, chief economist at Security Pacific NationalBank in Los Angeles, said the leading index was giving "just one moresignal that we are going to have better growth later on in the year."