WRAPUP 3-Manufacturing data hints US recovery pace slowing

* Pace of manufacturing growth slows in New York state

* NY state’s employment index hits six-year high

* Homebuilder sentiment highest since August 2007

* Home improvement chain Lowe’s cautious on economy
(Adds housing data, more comments)

By John Parry

NEW YORK, May 17 (BestGrowthStock) – The pace of the U.S. economic
rebound may be slowing, manufacturing data suggested on Monday,
as concerns grow about the impact of Europe’s debt crisis on
global growth.

A disappointing profit forecast by the second-largest U.S.
home improvement store chain, Lowe’s Cos, also clouded the
recovery outlook, and the company’s chief executive was
cautious about an economic recovery.

But a rise in U.S. homebuilder sentiment according to an
industry gauge to the highest level in more than two years
offered a glimmer of optimism and some hope for housing after a
long slide.

The New York Federal Reserve said its gauge of
manufacturing in New York state showed the pace of growth
slowed in May, though the jobs index component rose to its
highest level in about six years, For details, see
[ID:N17209874].

“This is just confirmation that the recovery is not exactly
robust,” said Peter Kenny, managing director of Knight Equity
Markets in Jersey City, New Jersey.

The New York Fed’s “Empire State” general business
conditions index fell to 19.11 in May from 31.86 in April.
Economists polled by Reuters had expected a May figure of
30.00. Readings of more than zero show growth. The index has
now shown growth for 10 straight months.

“We do think that some of the boosts to manufacturing
activity in the recent months have been temporary,” said Julia
Coronado, senior U.S. economist with BNP Paribas in New York,
noting that the data may indicate growth is slowing in the
manufacturing sector.

Even so, there were some signs that housing market activity
is on the rise, after a three-year tumble in prices.

U.S. home-builder sentiment rose in May to the highest
level in more than 2-1/2 years, boosted by a homebuyer tax
credit and a strengthening economy, the National Association of
Home Builders said on Monday. [ID:nWEQ003927]

The NAHB/Wells Fargo Housing Market index increased three
points to 22, the highest since August 2007, the group said in
a statement. It was the second straight month of gains in the
index. Overall sentiment, however, remained negative, with a
reading below 50 indicating more builders view sales conditions
as poor than good.

NAHB chief economist David Crowe said tight access to
credit, competition from short sales and foreclosures were
major obstacles on the path to a healthier housing market.

The chief executive of home improvement chain Lowe’s Cos
Inc, Robert Niblock, also offered caution on the housing
market, saying home prices likely will not bottom until the
first half of next year.

“We’re still somewhat cautious regarding the state of the
consumer and the economy as a whole,” the company said in a
statement. Niblock said challenges in Europe could have a
negative impact on U.S. economic recovery, especially in terms
of demand for exported goods.

Shares of Lowe’s (LOW.N: ) fell nearly 4 percent after its
disappointing profit outlook. [ID:nN17148997].

The turmoil in European debt markets has caused economists
to delay their forecasts of when the Federal Reserve will start
raising interest rates, according to a Reuters poll.

Six weeks ago a majority of the big banks that deal
directly with the Fed thought the U.S. central bank would raise
interest rates before the end of this year. By last week, most
predicted the first hike would come in 2011. See
[ID:nN16188063].

For now, there are some benefits to the United States from
investors’ growing appetite for dollar-denominated assets
stoked by their jitters about European debt. Foreign buying of
Treasuries is on the rise, which is helping to keep yields low
and borrowing costs cheap for the U.S. government and
consumers.

Data released on Monday showed that foreign investors set a
record for purchases of long-term U.S. securities in March,
snapping up $140.5 billion and shattering a previous peak hit
in 2007, the Treasury Department said on Monday.
[ID:nN17253180].

As U.S. borrowing costs remain relatively low, there were
signs that Americans are managing their debts more tightly,
perhaps helped by improvements in the economy

U.S. credit card delinquencies fell for the fourth straight
month in April, the latest indicator that Americans are
recovering from the worst economic downturn since the Great
Depression. [ID:nN17207920].
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For U.S. Treasuries graphic
http://graphics.thomsonreuters.com/10/US_TICS0510.gif
For Lowe’s graphic
http://link.reuters.com/cug64k
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Stock Market Trading

(Additional reporting by Lucia Mutikani, Wanfeng Zhou, Dhanya
Skariachan, Emily Flitter, Steven C. Johnson, Emily Kaiser,
Chuck Mikolajczak and Joe Rauch; Editing by Leslie Adler)

WRAPUP 3-Manufacturing data hints US recovery pace slowing