Three data releases at 10:00 failed to sing in tune with each other. A key indicator of output showed some improvement but is still contracting overall, and while contracts for home purchases are on the rise, spending on the construction of new homes it at historic lows.

In real estate, the Pending Home Sales Index improved for the fourth straight month in May, though the gain was just 0.1%. Since last year, the index has now improved 6.7%.

NAR's chief economist Lawrence Yun continued to say that poor appraisals were hurting the finalization process of homes transactions.

"Closed existing-home sales have improved but are coming in lower than expected because some contracts are delayed or falling through from the application of new appraisal rules for many transactions," he said. "Rises in contract activity show buyers are becoming more active even as they face much more stringent loan underwriting standards. Speedy clarification of the appraisal rules could smooth a housing market recovery and support the overall economy."

Regionally, results were volatile. The Northeast saw contracts move up 3.1% and the West improved 2.2%, but in the Midwest contracts saw a 1.3% decline, and in the South they fell 1.7%.

"Strong activity by entry level buyers is helping to absorb inventory and allow some existing owners to make a trade," Yun said.

Released at the same time was the ISM Manufacturing index, a key sentiment-based survey based on the opinions of business executives. It failed to grow in June but conditions did improve in line with expectations. The index moved up 2 points to 44.8, a little more than 5 points below the level indicating growth.

Seven of the 18 industries surveyed reported growth in the month, helped by a 6.5-point improvement in the Production component, which broke into growth mode at 52.5. Employment saw a similar 6.4-point rebound, yet it remains far from expansion at just 40.7.

On the negative side, New Orders dropped 1.9 points, pushing it back into contraction. Inventories also moved downwards, but all other components improved from May.

"Overall, a slow recovery for manufacturing is forming based on the current trends in the ISM data," said Norbert J. Ore, chairman of the ISM's Business Survey Committee.

John Herrmann from Herrmann Forecasting said the report was indicative of growth in the coming months.

"This June ISM report, along with our forecast for a further rebound in August - December, shows that the US recession should end in 3Q-2009, and that US real GDP growth is 4Q-2009 is likely +3.22%," he said.

The bad news from 10:00 was Construction Spending, which lost 0.9% in May, pushing the value to its lowest level in more than half a decade. Analysts were expecting a drop of 0.5%.

In addition, the 0.8% gain in April was revised down to 0.6%.

Details were pretty weak: residential construction fell -3.4%, as single-family homes declined 4.5% and multi-family homes plummeted 9.6%. On the plus side, private nonresidential construction inched up 0.5%.

"The construction spending figures should ultimately be lifted by stimulus-related spending on infrastructure projects as well as the bottoming of the housing market," said Deutsche Bank's Joseph LaVorgna. "We expect this to become more apparent later in the second half of the year."