updated 3/28/2007 9:17:51 AM ET 2007-03-28T13:17:51

Orders to factories for big-ticket manufactured goods rose modestly in February, helped by a rebound in sales of commercial aircraft and autos.

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The Commerce Department reported Wednesday that demand for durable goods rose by 2.5 percent last month after having plummeted by 9.3 percent in January. The huge January decline, the biggest in 6½ years, was one of the factors that triggered a one-day drop of 416 points in the Dow Jones industrial average as investors grew worried that the economy was slowing abruptly.

Even with the February rebound, which was smaller than the 3.5 percent gain that Wall Street was expecting, the report continued to raise worries about the health of the manufacturing sector. Outside of the volatile transportation sector, orders were down 0.1 percent, the fourth decline in this category in the past five months.

The strength last month was led by a 9.6 percent rise in orders for transportation goods, led by an 88.4 percent surge in orders for commercial aircraft, reflecting a pickup in demand at Boeing Co. Orders in the troubled auto industry rose by 1.3 percent, rebounding from a 9.2 percent drop in January.

But orders for non-defense capital goods excluding aircraft fell by 1.2 percent following an even larger 7.4 percent drop in January. This category is closely watched for signals it can provide of business plans to expand and modernize.

The hope was that economic growth would be supported this year by strong increases in business investment, which would help cushion the impact of the sharp slowdown in housing.

If business investment also falters, that would raise concerns about a recession this year, something that former Federal Reserve Chairman Alan Greenspan has said is a one-in-three possibility.

The Fed last week triggered a big stock market rally by signaling after its March meeting that it would consider cutting interest rates if economic growth weakens further.

Outside of airlines and autos, there was weakness in a number of key categories with demand for primary metals such as steel falling by 1 percent while orders for fabricated metal products were down 2.3 percent and demand for machinery fell by 0.4 percent.

Demand for computers was up 4.8 percent while orders for communications equipment rose by 10.7 percent.

In a reflection of the problems facing the housing industry, the category that includes household appliances saw a 5.5 percent drop in February.

Overall, the 2.5 percent increase was the largest since a 3.5 percent rise in December and pushed orders to a seasonally adjusted total of $206.9 billion in February.

The January decline was revised in the new report to show an even bigger drop of 9.3 percent from an earlier estimate of an 8.7 percent decline.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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