The U.S. economy was on a modest growth path early in the second quarter with home resales falling in April and manufacturing activity on the backfoot in May, although the labor market continued to tighten. Growth is struggling to rebound strongly after slumping at the start of the year, weighed down by bad weather, a strong dollar, port disruptions and deep energy spending cuts.
The sturdy labor market keeps the Federal Reserve on track to raise interest rates later this year. Minutes of the U.S. central bank’s April meeting released on Wednesday showed most policymakers saw little chance of a June rate hike because of the anemic pace of the rebound in growth so far. “The labor market is doing well and continues to tighten. Still, the economy got off to a slow start this quarter. It seems it hasn’t found a rhythm after the poor first three months of the year,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.
The National Association of Realtors said existing home sales declined 3.3 percent to an annual rate of 5.04 million units last month. Despite the fall, which followed a hefty increase in March, the sales pace remained above 5 million units. The Realtors group said sales continued to be hampered by a shortage of properties on the market, which is pushing up home prices and limiting choice for potential buyers.