"The housing sector continues to be the bright spot for the economy"
- Ward McCarthy, chief financial economist at Jefferies LLC
The manufacturing sector in the world's largest economy grew at its slowest pace in six months during April, while purchases of new U.S. homes rose last month, sending mixed signals and suggesting the Fed should continue its monthly purchases in order to achieve sustain growth. A gauge of manufacturing activity dropped to 52 from 54.6, while still remaining above the 50 level that marks the line between growth and contraction. In the meantime, the new order component of the index fell to 51.8 from 55.4 last month.
Also Tuesday, the Commerce Department said that sales of single-family properties inched up 1.5% last month to a 417,000 annual pace compared with a 411,000 rate in the prior month, posting the best quarter for the industry since 2008. Even though the manufacturing activity showed a slowdown, the housing market looks sustainable.
"The housing sector continues to be the bright spot for the economy," said Ward McCarthy, chief financial economist at Jefferies LLC in New York, who projected a 418,000 pace of home purchases. "Inventories are light, which means that builders are going to keep building."
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