WASHINGTON, DC: Sales of new US single-family homes increased more than expected in May and business activity contracted moderately this month, suggesting the economy was on the cusp of recovering from the recession caused by the COVID-19 crisis.
Economists polled by Reuters had forecast new home sales, which account for about 14.7 per cent of housing market sales, rising 2.9 per cent to a pace of 640,000 in May. The survey's services sector flash Purchasing Managers Index rose to a reading of 46.7 from 37.5 in May. The contraction in factory activity also ebbed this month, with the flash manufacturing PMI climbing to 49.6 from 39.8 in May.
But with record unemployment and companies freezing hiring to deal with weak demand and keep costs under control, a sharp rebound in the housing market is unlikely.