1. The July release of the gross domestic product (GDP) data included two major changes. The first was the annual benchmark revisions back to first quarter 2010, based on more complete data. The second was a larger change to the determination of GDP—expanding what is included in GDP. The development of intellectual property (including R&D, software development, and entertainment products, such as movies, music, and books) is now included in nonresidential fixed investment and is broken out as a line item: Intellectual property products

  2. The addition of these and a few other items raised the level of GDP for 2012 by roughly 2.5% from its previously reported level. However, the impact on the rate-of-growth in real (inflation-adjusted) GDP was minor, as shown in the table below. The (relatively) large upward change for 2012 growth was due more to the effects of the benchmark revision process producing more accurate data and estimates of missing data than to the inclusion of formerly excluded items in the GDP accounts

    Real GDP Annual Growth Comparison


  3. The first estimate of second quarter 2013 real GDP growth was 1.7% at a seasonally adjusted annual rate (SAAR), up from first quarter’s 1.1% rate. First quarter’s rate was down from the previously reported 1.8%, mainly due to benchmark revisions

  4. Real investment in nonresidential structures increased 6.8% after cratering 25.7% in the first quarter. The sharp revision in first quarter’s growth from a previously reported decline of 8.3% was mainly the result of a large downward revision in power construction spending

  5. July nonfarm payroll employment rose a seasonally adjusted (SA) 162,000, a slowdown from June’s addition of 188,000 jobs (revised down from an increase of 195,000) and a drop from the first half’s average monthly increase of 198,000 jobs

  6. The unemployment rate fell from 7.6% (SA) in June to 7.4%, its lowest level since December 2008

  7. Total construction employment fell by 6,000 jobs in July after increasing 8,000 jobs in June. The drop in July construction employment was due to continued weakness in nonresidential construction, with nonresidential building construction taking the largest hit. Despite July’s setback, construction employment was up 166,000 on a year-over-year basis

  8. The July not seasonally adjusted (NSA) unemployment rate for construction workers was 9.1%, down from 12.3% in July 2012―the lowest unemployment rate for construction workers since August 2008

  9. Total commercial construction spending fell 0.6% in June to $883.9 billion (SAAR). Year-to-date NSA spending was 5.1% higher than the same period in 2012. The June spending number included the following:
    • Nonresidential building construction spending was down 1.7% to $286.3 billion and year-to-date was down 2.3% from 2012
    • Heavy engineering (non-building) construction spending slipped 0.2% to $259.4 billion, and year-to-date was 2.5% lower than last year
    • New residential construction spending decreased 1.2% to $201.3 billion, its first decline since September 2011. Year-to-date, however, was up 34.5% from a year ago
  10. The June AIA Architecture Billings Index (ABI) was down 1.3 points to 51.6 from 52.9 in May. That still left the ABI above 50, the tenth month over the last eleven months that it was above 50. A reading above 50 indicates increased billings—a positive for future commercial construction

  11. Housing suffered a slowdown in early spring. That appears to be a temporary pause, possibly largely due to adverse weather in much of the country. With single-family housing permits continuing to increase and new home sales up, the outlook for single-family construction remains good. Multifamily construction’s pause seems to be related to the need for the rental markets to absorb the influx of new supply in many urban areas around the country

    • Single-family housing starts slipped 0.8% to 591,000 (SAAR) in June after inching up 0.5% in May. The 3-month moving average for single-family housing starts was down 1.8% to 593,000 in June. However, year-to-date single-family starts were up 20.2% from the same period in 2012
    • Single-family building permits rose 0.6% to 624,000 (SAAR) in June—its highest level since May 2008. The 3-month moving average for single-family permits was up 1.4% to 619,000—its highest level since June 2008
    • The NAHB/Wells Fargo Housing Market Index (HMI) hurdled 6 points higher to 57 in July after leaping 7 points in June. June and July mark the first two months that the HMI was above 50 since April 2006, a strong indication that single-family residential construction will soon return to its upward path
    • The reason for homebuilders’ optimism and the resulting jump in the HMI can be found in new home sales, which shot up 8.3% to 497,000 (SAAR) in June after increasing 1.3% in May
    • The unleashing of pent-up demand for single-family homes, along with limited supply (at least in the short run), has pushed housing prices higher. Both of the seasonally adjusted (SA) 10-city and 20-city S&P/Case-Shiller® Home Price indexes have increased for 16 months in a row. In May, they were up 1.1% and 1.0%, respectively. On a year-over-year NSA basis, the 10-city index was up 11.8%, and the 20-city index was up 12.2%
    • For all 20 cities, home prices increased for the fifth consecutive month on an NSA year-over-year basis. On a monthly SA basis, two cities did see their home prices slip in May—Cleveland (-0.5%) and Minneapolis (-0.2%)
    • The Federal Housing Finance Agency’s (FHFA) Purchase-Only Home Price Index was up 0.7% (SA) in May, its sixteenth consecutive monthly increase. On a year-over-year NSA basis, the index was up 7.3%
    • Multifamily housing starts plummeted 26.2% to 245,000 (SAAR) in June after skyrocketing 28.2% in May. The 3-month moving average, which smooths out most of these erratic monthly variations, dropped 14.1% to 279,000 from May. Year-to-date starts were up 34.3% in June from the same period a year ago
    • The 3-month moving average of multifamily building permits decreased 0.4% in June to 348,000 permits
  12. The June Producer Price Index (PPI) for finished goods was up 0.8% (SA) after increasing 0.5% in May. On a year-over-year NSA basis, the June PPI was 2.5% higher

  13. A price index for inputs used in nonresidential construction, excluding capital equipment, was unchanged (NSA) in June after rising 0.2% in May. The index was up 1.2% (NSA) from June 2012, while the PPI for inputs for residential construction was up 1.9%

  14. The Consumer Price Index (CPI) rose 0.5% (SA) in June after inching up 0.1% in May. The NSA CPI was 1.8% higher than in June 2012. Core CPI, which excludes food and energy prices, increased 0.2% (SA) for the second month in a row. On a year-over-year basis, the index was up 1.6% (NSA) in June