After seven down years, modest cement consumption for 2012 forecast

Source: Portland Cement Association, Skokie, Ill.

Stronger than expected job creation and the beginning of a construction industry recovery means gains in real construction spending will materialize this year—after seven years of consecutive declines. According to the new forecast from PCA, increases in cement consumption will follow. PCA revised its fall forecast upward from 1.1 percent, to a modest 3.7 percent increase in 2012, followed by a 7.6 percent jump in 2013 and a 14.1 percent surge in 2014.

The forecast includes marginal improvements to nonresidential construction, an upward revision to housing starts and an aggressive cement intensity gain, which is the amount of cement used per real dollar of construction activity. “Cement usage is greatest at the early stages of construction with foundation work. The retreat of building starts during the recession had a huge impact on consumption and intensity,” said PCA Chief Economist Ed Sullivan. “A construction start rebound in 2012 coupled with concrete’s competitive price compared to other building materials translates to increases.”

With successive years of economic and employment growth, the structural issues facing the construction industry will diminish, Sullivan said. For example, foreclosures’ adverse impact will fade, and return on investment for nonresidential investments will improve. Partially because of these improvements, state deficits will eventually be replaced by surpluses. PCA forecasts all sectors of construction to be positive during 2014-2015, which typically results in large gains in cement consumption.