Economy in Doldrums, Index Shows

WASHINGTON —  The index of leading economic indicators dropped 0.2% in March, the Commerce Department said today, reversing a two-month gain and reinforcing signs of a slow-moving economy.

The latest report also revised downward the gains posted by the index for the last two months--dropping the February increase to 0.5% from 0.7% and the January gain to 1.3% from 1.5%.

Seven of the 10 indicators on the government’s main economic forecasting gauge contributed to the decline, led by a slowdown in the formation of new businesses.

“The index is sort of going nowhere,” department analyst Adren Cooper said. “It is not exactly busting its buttons.”

After reaching its recovery high point last May the index has tumbled, regaining only some of the lost ground this year.

The report was one of three extremely weak statistics President Reagan was given to take with him as he leaves today for the Bonn economic summit. The department also reported that the March merchandise trade deficit was a whopping $11 billion, nearly the same as February and the third big monthly deficit in a row.

Effect on GNP

The trade figure has a big influence on the measurement of the gross national product, and another $11 billion in red ink at the end of the first quarter dashed hopes that the weak GNP figure already reported for the period--1.3%--will be revised upward by any great amount.

In a third report released today, the department said factory orders dropped 0.9% in March, the eighth decline in 12 months. The report contained a revision in the category of durable goods, such as factory machinery and automobiles, showing that those orders were down 3% instead of the 2.3% estimated last week.

Since two of the 10 leading indicators were drawn from the advance report on durables, today’s revision means the composite index was actually down by even more than 0.2%.