New construction starts increased 4 percent in May to a seasonally adjusted annual rate of $496.6 billion, according to the Dodge Division of McGraw-Hill Construction, part of The McGraw-Hill Companies.

Greater activity was reported across a wide range of project types, resulting in moderate growth for the industry's three main sectors - nonresidential building, residential building, and non-building construction.

"The improved activity in April and May shows the construction industry climbing back to last year's pace," stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. "However, this year is seeing a different mix by project type - more single family housing and public works, while commercial building remains well below the levels reported in the early months of 2001."

Nonresidential building in May climbed 6 percent to $156.6 billion, while commercial construction registered some improvement in May, with hotels up 5 percent stores up 8 percent and warehouses up 16 percent. Despite these gains, hotel and warehouse construction are still substantially weaker than their first half 2001 levels. Residential building, at $238.5 billion, was up 2 percent in May. The modest increase was the result of a 1 percent gain for single-family housing, combined with a 13 percent pickup for the multifamily side of the market. Non-building construction in May grew 3 percent to $101.6 billion.

During the first five months of 2002, total construction on an unadjusted basis maintained a 1 percent lead over the same period of 2001. By sector, residential building was up 10 percent, followed by a 1 percent gain for non-building construction. In contrast, nonresidential building trailed its 2001 pace by 11 percent.