The rate of total construction starts gained five percent between April and May due to gains in residential and non-residential building; the index measuring the prices for raw construction materials was unchanged in May, with slight fluctuations in lumber, diesel fuel and gypsum products.

New construction starts increased by five percent to a seasonally adjusted annual rate of $495.7 billion in May, spurred by gains in non-residential building, housing and public works projects. Year-to-date spending, however, is three percent lower than in May 2012.

During the first five months of 2013, total construction starts on an unadjusted basis were reported at $187.6 billion, down from $193.4 billion at the same time last year, according to a June 24 report from McGraw Hill Construction. If electric utilities projects – down 70 percent year-to-date – were excluded, total construction starts would be up 10 percent year-to-date, assisted by a rising pace of housing starts.

"The housing sector played a leading role last year in lifting overall construction activity, and while this year's month-to-month gains have been smaller, housing continues to lead the hesitant construction expansion," said Robert Murray, vice president of economic affairs for McGraw Hill Construction. "Nonresidential building has yet to provide much of a contribution, as tenuous gains for commercial building have been offset by further weakness for institutional building. Still, the April and May pickup for nonresidential building could be a sign of more growth to come."

Material Prices

The producer price index (PPI) for all construction inputs "?u a weighted average of the cost of all materials used in construction that includes items consumed by contractors, such as diesel fuel "?u was flat in May and rose just 0.8 percent year-over-year, according to the Associated General Contractors of America's analysis of a June 17 Bureau of Labor Statistics report.

The largest year-over-year price increases among major construction inputs were for gypsum products (0.5 percent in May; 19 percent over 12 months) and lumber and plywood (-3.3 percent and 13 percent, respectively). The largest downward annual price changes were for steel mill products (-1.3 percent and -9.5 percent), copper and brass mill shapes (-2.9 percent and -7.4 percent) and diesel fuel (-3.4 percent and -5.5 percent).

Most new nonresidential building construction and subcontractors' work indexes rose slightly. The PPI for new schools was flat in May and up 0.4 percent from a year ago; offices, 0.3 percent and 1.1 percent; industrial buildings, 0 percent and 1.5 percent; warehouses, 0.7 percent and 2.7 percent; and the index for new health care buildings was unchanged since April and up 0.5 percent since June 2012, when it was introduced. The indexes for concrete and plumbing contractors were both flat in May and up 1.3 percent from a year ago.

Click here to view the May PPI tables.