US economic momentum expected to spill over into construction industry

The Portland Cement Association has forecast strong growth rates for the construction industry in 2013 and an increase in cement consumption too. According to the association’s predictions, Improvements in the underlying economic fundamentals, the existence of large pent-up demand balances, and the diminishment of economic fiscal cliff uncertainty will all combine to the benefit of cement.

The details of this latest PCA forecast specify that there will be an 8.1% growth in cement consumption in 2013, significantly higher than the tepid growth projected in the association’s previous report. The upward revisions reflect adjustments made in light of the recent fiscal cliff accord, recognition of stronger economic momentum, and markedly more optimistic assessments regarding residential construction activity. The January report marked 2012 consumption at 78.5 million t, an 8.9% increase on the 2011 figure.

PCA Chief Economist, Ed Sullivan, said, "Growth in 2013 cement consumption will be largely driven by gains in residential construction. Housing starts should reach nearly 950 000 units, with single-family construction near 700 000 starts during 2013. We should see starts hitting the one million mark in 2014 or 2015."

Sullivan did caution, however, that 1Q13 would actually show declines compared to the same period in 2012, saying, "It is important to point out that this potential decline in first quarter growth rates does not signal a weakening in market fundamentals, but rather a hangover from favorable 2012 weather conditions. Stronger gains in cement consumption growth are expected during the second quarter."

The accelerated consumption predicted during 2H13 should carry into the following year. PCA projects an increase of 8.3% percent for 2014.

PCA also upwardly revised its long-range projections for 2015 – 2017. Annual growth during that period is expected to rise as high as 9.2%. Cement consumption is dictated by the level of construction activity and by the prevailing cement intensity. While 2017 cement intensity levels remain well below the pre-recession averages and upside risks remain, these risks have been significantly reduced.

Adapted from press release by Jack Davidson.

Read the article online at: https://www.worldcement.com/the-americas/18012013/pca_forecast_strong_constuction_industry_growth_-842/