PCA: Cement consumption likely to grow steadily over next 5 years

| May 29, 2014

pouring concreteDespite data that suggests the economic recovery in the U.S. is slowing down, Portland Cement Association (PCA) chief economist Ed Sullivan says he still believes construction and cement consumption will steadily grow over the next five years.

The economic causes of concern include the fact that real gross domestic product (GDP) fell during the fourth quarter of 2013 from 4.1 percent to 2.6 percent. In addition, construction activity has slowed, mortgage applications and the housing market in general are stalling and consumer confidence is down, according to a PCA report.

But Sullivan believes the real problem has less to do with the soundness of the recovery and more to do with the weather much of the U.S. saw this winter which was much more severe than normal. The adverse weather conditions resulted in year-over-year losses in construction consumption in the northern states of as much as 25 percent.

He points to an increase in jobs, consumer wealth, strong corporate profits, resilient labor markets and a low ratio of consumer debt to household income as evidence of the healthy condition of the recovery. And then there’s the fact that despite the weather cement consumption actually recorded gains in the U.S.

In the first quarter cement consumption rose 4.5 percent over the same period in 2013. Without the adverse weather, Sullivan estimates growth would have been between 7 and 8 percent.

“While there is reason for concern that economic growth dynamics have been changed as a result of the recession, there is also ample reason to suggest the economy has weathered the healing process and is just now beginning to transition to a stronger growth plateau,” Sullivan concludes. “Keep in mind, the recession not only resulted in a forced correction of imbalances, but also generated tremendous pent-up demand. The release of pent-up demand will add strength to economic growth rates going forward.”

In the near-term, Sullivan said in an address at the World of Concrete trade show in January he expected cement consumption to grow 8 percent in 2014.

“At no time in our history has there been this level of pent up demand,” Sullivan said at the time. “People have postponed major purchases such as cars and homes for such an extended period, and that provides strong consumer growth going forward.”

Editor’s note: Wayne Grayson is the online editor for sister site Equipment World.

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