The government's index of leading indicators rose by 1.5 percent in March, the seventh consecutive monthly gain and a clear sign that the economy is on the mend, the Commerce Department reported yesterday.

The index of leading indicators gives a guide to future movements in the economy. It "has increased by a strong 6.2 percent since December," Commerce Secretary Malcolm Baldrige said. Another index--which aims to measure what is happening in the economy at the moment--also rose last month, yesterday's release said.

The index of coincident indicators had fallen in February, leading some economists to question the strength and durability of recovery. The Commerce Department said yesterday that this index climbed by 0.7 percent in March and by 1.3 percent in January, with a 0.5 percent dip during February.

Seven out of the eleven indicators that comprise the leading index rose last month, the report said. The increases were "broad and impressive," economist Allen Sinai of Data Resources Inc. said. "They suggest a stronger second half for the economy than first half," he said.

The biggest contribution to the increase came from a rise in prices of some raw materials, which are sensitive to changes in demand. Other indicators which contributed to the rise included the average workweek; vendor performance; net business formation; contracts and orders for plant and equipment, after accounting for inflation; stock prices, and money supply after allowing for inflation.

The increase in the average workweek is "indicative of higher incomes in coming months," Sinai said, adding that in turn this "should lead to higher consumer spending." Consumers have so far been somewhat cautious about spending more, largely because unemployment remains extremely high, at 10.3 percent in March. It will "still not be until sometime in the second quarter that consumers begin to loosen their purse strings," Sinai said, although incomes have now started to rise markedly after allowing for inflation and unemployment is on the way down.

The four indicators that declined in March were claims for state unemployment insurance; manufacturers' new orders for consumer goods and materials, after inflation; building permits, and change in outstanding credit.

"In coming out of recessions, the leading index typically shows strong gains for a time, as it has done recently," Baldrige said. In January, the index jumped by 3.2 percent, and in February it climbed 1.4 percent. "Based on past experience, the recent strength in the leading index foreshadows further advances in key economic series such as employment, production, income, and business sales.

The increase in the leading indicators last month brought the total rise in the first three months of the year to more than the average for previous postwar recoveries, the Commerce Department said. The 6.2 percent increase between December and March compared "very favorably" with an average of 4.8 percent, Commerce Chief Economist Robert Ortner said.

However, he said this did not mean that the economic reocvery itself would be stronger than average. The administration still predicts less growth this year than the 7 percent postwar average growth in the first year of recovery, Ortner said.

The coincident index has gone up by only 1.4 percent since December, less than the 2.4 percent average rise in this index in the early months of recovery, he said. This index reflects actual production and output.