Durable goods up 2.5 pct.

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

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

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

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

Other analysts said it could be a sign that businesses are cutting back on plans to expand and modernize in the face of an economic slowdown that has now lasted 12 months.

"Unfortunately, this comes at the worst time for the economy as [business investment] was expected to provide some offset to the steady contraction in housing," said Michael Gregory, senior economist at BMO Capital Markets.

The 2.5 percent increase in orders for durable goods was led by a 9.6 percent rise in demand for transportation products.

But outside of transportation, there was widespread weakness. Orders excluding transportation were down 0.1 percent, the fourth decline in five months.