Durable goods orders rise less than expected

WASHINGTON -- Orders to factories for big-ticket manufactured goods posted a disappointing increase in February that raised new worries about the strength of the economy.

Demand for durable goods increased 2.5 percent in February, the Commerce Department reported yesterday. It was a weaker-than-expected rebound from a huge 9.3 percent drop in orders that occurred in January.

That January decline jolted financial markets around the world and contributed to a 416-point drop in the Dow Jones industrial average Feb. 27 as investors grew more worried about a possible recession this year.

In the new reports, analysts were especially concerned about continued weakness in business investment, which fell 1.2 percent in February, the fourth decline in the past five months.

This category, which covers nondefense capital goods excluding aircraft, is viewed as a proxy for business plans to expand and modernize.

If business spending falters significantly, it could raise the risk of a recession in an economy already struggling from a sharp slowdown in housing.

Stephen Stanley, chief economist at RBS Greenwich Capital, said he trimmed his estimate for economic growth in the current January-March quarter to 2.2 percent, matching the lackluster performance of the final three months of last year.