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PCA39s chief economist Ed Sullivan said rising interest rates will cause the economy and cement consumption to slow through 2021 but the economy remains strong
PCA's chief economist Ed Sullivan said rising interest rates will cause the economy and cement consumption to slow through 2021, but the economy remains strong.

PCA Forecasts Moderate Cement Consumption Growth at 2.3 Percent in 2019

The Portland Cement Association 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 will grow by 2.3 percent in 2019; compared to the Fall 2018 forecast this represents a marginal slowing in the pace of growth.

“While there are several phenomena that confront the economy in the next two years, PCA believes the economy is strong,” said Ed Sullivan, PCA senior vice president and chief economist.  “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-prioritize spending. “Absent a new near-term infrastructure program, public sector cement consumption is also expected to slow as transportation investment takes a back seat to high state spending priorities,” Sullivan said.

PCA’s analysis notes the labor 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 two million jobs for the next two years. 

“Overall, the pace of cement consumption growth is expected to soften each year through 2021,” said Sullivan. “In 2022, interest rates are expected to reach their apex and recede slightly. At about this time, the supplemental infrastructure initiative is expected to materialize.”

The Portland Cement Association, founded in 1916, represents 93 percent of U.S. cement production capacity and have facilities in all 50 states. The association promotes safety, sustainability, and innovation in all aspects of construction, fosters continuous improvement in cement manufacturing and distribution and generally promotes economic growth and sound infrastructure investment.

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