In its latest report, the Portland Cement Association expects US cement consumption to meet 2014 forecast expectations in spite of a late start to the construction season and weaker than expected housing start numbers.
The association’s cement forecast remains essentially unchanged since the September 2014 forecast, though with some adjustments to take into account the weaker housing starts and the impact of the oil price reduction. PCA Chief Economist and Group Vice President Edward Sullivan explains: “The United States’ cement market is expected to grow 8.2% in 2014, followed by similar rates of growth in 2015 and 2016. However, minor adjustments have been made regarding the construction sub-sectors. Housing starts, for example, have been trimmed slightly compared to forecasts released earlier in 2014.”
While single-family housing starts are not reaching projected levels, the report indicates a new emphasis on multifamily starts. Demographic trends and the still strict mortgage standards are pushing more potential homebuyers into rental units. Additionally, the oil price environment has changed significantly since the summer and these new impacts have been integrated into the forecast projections for the paving sector.
Going forward, Sullivan is optimistic for 2015. The underlying economic fundamentals are strengthening and are reflected in the labour market. Sustained gains in monthly job creation, stronger state and local tax receipts, more favourable return on investments for commercial building and stronger household formation can lead to stronger construction spending next year.
Adapted from press release by Katherine Guenioui