Forecast puts robust cement consumption gains off until 2014

Source: Portland Cement Association, Skokie, Ill.

Job creation is key to improving many economic indicators, and its reduction translates into a longer wait for the construction and cement recovery. Even with an economic recovery, construction levels will remain at new floor levels and lead to relatively flat cement consumption until 2014, according to the most recent economic forecast from PCA, which revised its cement consumption forecast to increases of 1.1 percent in 2011 to about 71 million metric tons (mt), 0.5 percent in 2012 to 71.3 million mt, and 7.4 percent in 2013 to 76.6 million mt—roughly half of the previous forecast. According to the report, large structural issues exist in each construction sector that will slow recovery.


“The Great Recession was construction focused. Residential, nonresidential and state discretionary construction levels collapsed,” Edward Sullivan, PCA chief economist said. “Despite economic growth, the residential sector, for example, will continue to be plagued by a large volume of foreclosures, tight lending standards and weak new home prices. I don’t see a rebound in most of that market until 2014.”

Recovery for the construction industry is tied to general economic growth and job creation, Sullivan added. Job creation will reduce, and eventually eliminate, the adverse impacts of foreclosures, tight lending standards, commercial occupancy and leasing rates as well as the severity of state fiscal conditions. However, because the impediments to a construction recovery are so large, even if an acceleration in economic growth and job creation occurs on a sustained basis, the benefits will not materialize quickly.

According to Sullivan, nonresidential construction will also remain low until 2013, and lack of assured federal funding will drag down the public sector until 2014.