The Portland Cement Association (PCA) has released its annual spring forecast, which envisions strong to moderate growth for cement consumption through 2019 and into 2020. PCA Market Intelligence expects cement consumption to grow by 2.3% in 2019. Compared to the Autumn 2018 forecast, this represents a marginal slowing in the pace of growth.
The PCA’s analysis notes that the labour market remains strong. On a monthly basis, the economy has generated 235 000 net new jobs. While this pace is expected to ease in subsequent years, it is expected to generate more than 2 million jobs for the next two years.
“While there are several phenomena that confront the economy in the next two years, the PCA believes the economy is strong,” said Ed Sullivan, Senior Vice President and Chief Economist of the PCA. “As interest rates rise, they will steal some strength from economic growth. Private construction growth, being an interest rate sensitive sector, is expected to slow under the weight of higher interest rates. Cement consumption growth will slow as a result.”
In addition, rising state deficits have forced many states to adjust budgets, reduce costs, and re-prioritise spending. “Absent a new near-term infrastructure programme, public sector cement consumption is also expected to slow as transportation investment takes a back seat to high state spending priorities,” said Sullivan. “Overall, the pace of cement consumption growth is expected to soften each year through to 2021. In 2022, interest rates are expected to reach their apex and recede slightly. At about this time, the supplemental infrastructure initiative is expected to materialise.”
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