US consumer confidence edges up in May

New home sales rise 0.6% in April

WASHINGTON: US consumer confidence nudged up in May, suggesting the worst of the novel coronavirus-driven economic slump was likely in the past as the country starts to reopen, but it could take a while for the economy to dig out of its hole amid record unemployment.

Signs the downturn could be close to bottoming were bolstered by other data on Tuesday showing the pace of decline in manufacturing activity in Texas and services industry contraction in the mid-Atlantic region easing this month.

“The worst may be over for the economy,” said Chris Rupkey, chief economist at MUFG Union Bank in New York. “We still can’t see a V-shaped recovery, but at least this is looking like the shortest recession in history which will be measured in months not years.”

The Conference Board said its consumer confidence index edged up to a reading of 86.6 this month from a downwardly revised 85.7 in April. Economists polled by Reuters had forecast the index rising to 87.5 in May from the previously reported reading of 86.9 in April.

Businesses across the country are opening doors after shuttering in mid-March as states and local governments took drastic measures to slow the spread of Covid-19, the respiratory illness caused by the virus, almost grounding the country to a halt.

The economy contracted at its deepest pace in the first quarter since the Great Recession and lost at least 21.4 million jobs in March and April.

Recessions in the United States are called by the National Bureau of

Economic Research, which does not define a recession as two consecutive quarters of decline in real gross domestic product, as is the rule of thumb in many countries.

Instead, the NBER looks for a drop in economic activity, spread across the economy and lasting more than a few months.

Economists believe the economy slipped into recession in March.

The improvement in the consumer confidence data tone was echoed by a survey from the Dallas Federal Reserve on Tuesday showing Texas factory activity falling again in May, but at a slower pace compared to April’s record plunge. Similarly, services industries in the midAtlantic region reported a continued decrease in activity, but a pulling away from a historic slump in April.

Separately, the Commerce Department said new home sales increased 0.6% to a seasonally adjusted annual rate of 623,000 units last month. Still, the gain left the bulk of March’s 13.7% plunge intact.

Economists had forecast new home sales, which account for about 10% of housing market sales, diving 21.9% to a pace of 480,000 units in April.

While the sales gain was at odds with data last week showing home resales logging their biggest drop in nearly 10 years in April, and homebuilding and permits suffering record collapses, it added to rising mortgage applications and homebuilder confidence in offering a hopeful sign for the housing market.

“This is perhaps another sign that demand for housing has remained strong despite the record spike in unemployment and social distancing restrictions which have limited house shopping this spring,” said Ben Ayers, senior economist at Nationwide in Columbus, Ohio.