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PCA Forecast Puts Off Robust Cement Consumption Until 2014

The Portland Cement Association last week revised its forecast for cement consumption and the overall recovery of the construction industry. Job creation is key to improving many economic indicators, and its reduction translates into a longer wait for the construction and cement recovery, PCA said. Even with an economic recovery, construction levels will remain at new floor levels and lead to relatively flat cement consumption until 2014.

PCA revised its cement consumption forecast to increases of 1.1 percent in 2011, 0.5 percent in 2012 and 7.4 percent in 2013 — 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,” said Edward Sullivan, PCA chief economist. “Residential, nonresidential and state discretionary construction levels collapsed. 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. 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, PCA said. 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.

Based in Skokie, Ill., PCA represents cement companies in the United States and Canada. It conducts market development, engineering, research, education, and public affairs programs.

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