Manufacturing improves; pending home sales rise

The manufacturing sector is continuing its slow recovery, an optimistic signal that the overall economy is working its way back to health.

And a new report said pending homes rose slightly in May -- the fourth monthly gain in a row.

The Institute of Supply Management manufacturing index rose to 44.8 in June, the strongest reading since September. In May, the ISM index came in at 42.8.

While the June reading was lower than economists' expectations of 45.6, and was below 50, which indicates contraction in the sector, the index has shown a marked improvement since December's low of 32.9.

"The ISM report represents yet another sign that the worst of the downturn may have ended," Nomura Securities chief economist David Resler wrote in a note this morning.

There was some good news for housing this morning, too. The National Association of Realtors' Pending Home Sales Index rose 0.1% in May. On a year-over-year basis, the index was up 6.7% in May.

It was the first four-month run-up in in the index since October 2004.

The index is based on sales contracts on existing homes. The NAR reports on sales of existing homes once the sales close, usually six to eight weeks later.

Pulte Homes (PHM) was up 1.5% to $8.96. Ryland (RYL) was up 2.4% to $17.16, but D.R. Horton (DHI) was off 0.2% to $9.34.

Elizabeth Strott contributed to this report.