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.

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.

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 fell nearly 4 percent after its disappointing profit outlook.

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.

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.

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.

(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)

Manufacturing BNP Paribas New Jersey