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PCA: Low oil prices unlikely to have positive impact on US construction this year

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World Cement,

Portland Cement Association Chief Economist and Group Vice President Edward Sullivan confirmed during remarks at the 2015 World of Concrete that falling oil prices will influence US construction in 2015. He commented that low oil prices are beneficial to US economic growth and are expected to add 20 to 30 basis points to real GDP growth rates during 2015 – 2016, but that it’s a different story for the construction industry.

“Unfortunately, the transmission process from oil price declines to construction activity contains timing lags,” said Sullivan. “The time it takes for oil prices to impact consumer/business behaviour is short, but impacting the decisions to build is a longer process.”

As a result, Sullivan notes that it is unlikely that positive impacts for construction activity will materialise in 2015, or even during the first half of 2016. In fact, for energy industry states, it will have a negative impact on construction projects related to energy drilling and employee wages.

Despite this, job growth and a growing economy will have an overall positive impact on cement consumption this year.  PCA expects only small increases in cement consumption arising from low oil prices in 2015 and beyond. 

Adapted from press release by

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