Real (net of inflation) gross domestic product-the output of all goods and services produced by labor and property located in the U.S.-increased at a 3.4% seasonally adjusted annual rate in the second quarter, the Bureau of Economic Analysis (BEA) announced today. That compares with a 3.8% growth rate in the first quarter and 3.3% (revised from a previous estimate of 3.8%) in the fourth quarter of 2004. The growth rate for real investment in private nonresidential structures swung to +3.1% in the second quarter from -2% (previously -2.4%) in the first quarter and +4.7% (previously +2.1%) in the fourth quarter of 2004. (BEA, unlike the Census Bureau, defines structures to include mines and wells.) Investment in all types of structures contributed 0.8% out of the 3.4% total growth in real GDP. The price index for GDP, a broader inflation measure than the consumer or producer price index, slowed to a 2.4% annual rate of increase from 3.1% in the first quarter. The price index for investment in private nonresidential structures rose 9.7%, close to the 10.3% rate (previously 9.6%) in the first quarter. This index has risen more than the GDP price index for eight straight quarters.

“Reports from all 12 Federal Reserve districts indicate that economic activity continued to expand in June and early July,” the Fed reported in the latest “Beige Book,” released on Wednesday. Several districts reported increases in nonresidential construction and “also noted strong activity for producers of construction materials-especially cement….[There were reports of] substantial increases in the costs of energy and some building materials.”