Personal income rose a modest 0.4 percent in March, largely on the strength of higher interest payments to individuals and increases in military retirement pay and unemployment insurance benefits, the Commerce Department reported yesterday.

Wages and salaries climbed $1.1 billion to a seasonally adjusted annual rate of $1.543 trillion as the recession continued to take its toll. Manufacturing payrolls fell $1.3 billion compared with a $4.2 billion increase in February as declines in employment and average hours worked more than offset higher hourly pay.

Personal consumption spending, meanwhile, fell by 0.2 percent, or at a $3.9 billion annual rate, after rising 1.2 percent in January and 0.8 percent in February, the department said. Purchases of new cars declined $3.7 billion, and purchases of nondurable goods went down $4.6 billion, partly as a result of the large drop in gasoline prices.

The weakness in personal consumption spending for March confirmed a likely substantial decline in the first quarter's gross national product after adjustment for inflation. That figure, which is to be released today, was estimated unofficially earlier by the Commerce Department to show a drop in real output at a 4 1/2 percent annual rate. For the entire quarter, personal consumption spending probably rose slightly in real terms, but not by enough to offset a large decline in the rate of inventory accumulation by business.

Total personal income for March rose $10.4 billion to an annual rate of $2.525 trillion. Personal outlays fell $4 billion to a $2.006 trillion annual rate. In February personal income had increased $15.4 billion, and personal outlays were up $15.2 billion, according to revised estimates, the department said.

Transfer payments rose $5.8 billion in March, while personal interest income was up $5.5 billion.

With personal income after taxes up and personal outlays down, the personal savings rate rebounded from 5.0 percent in February to 5.7 percent in March. During January and February, consumers had kept their purchases high by reducing their rate of saving.