WASHINGTON U.S. factory activity expanded at its slowest pace in six months in April, the latest sign economic growth continued to lose momentum early in the second quarter.
Another report on Tuesday showed the housing market recovery pushing ahead, with sales in March the second-highest in three years.
Financial data firm Markit said its "flash," or preliminary, U.S. Manufacturing Purchasing Managers' Index fell to 52.0 this month, the lowest since October, from 54.6 in March.
The data "raises concerns that the U.S. manufacturing expansion is losing momentum rapidly as business and households worry about the impact of tax hikes and government spending cuts," said Chris Williamson, chief economist at Markit.
The "flash" reading is based on replies from about 85 percent of the U.S. manufacturers surveyed. Markit's final reading for April will be released on May 1.
Separately, the U.S. Commerce Department said new home sales increased 1.5 percent to a seasonally adjusted annual rate of 417,000 units last month.
Sales are being held back by a lack of supply of homes on the market in some major regions.
There were 153,000 new homes on the market last month, not far from record lows.
The tight inventory is highlighted by a very low months' supply, which at 4.4 months is below the six months normally considered as a healthy balance between supply and demand.
"We will need to see the housing market index start improving again to be sure the trend remains upward. But in the meantime this report is encouraging," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York.
Data ranging from employment to retail sales and manufacturing weakened significantly in March, indicating the economy lost some of the strength it had found at the start of the year. The Markit report suggested the soft patch carried into the early part of second quarter.
"This is in line with our view that growth slowed in March and April after a strong start to the year," said Cooper Howes, an economist at Barclays in New York.
The government is expected to report on Friday that the economy grew at a 3.0 percent annual rate in the first quarter, according to a Reuters survey, rebounding from a 0.4 percent advance in the final three months of 2012.
Manufacturing activity this month was hobbled by a decline in new orders, which were the weakest in six months, reflecting softer domestic demand. Export orders surprisingly rose, even though there are signs global demand is slowing. (Reporting by Lucia Mutikani in Washington and Steven C Johnson in New York; Additional reporting by Margaret Chadbourn; Editing by Andrea Ricci)
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