The Portland Cement Association (PCA) expects strong to moderate growth for cement consumption over the next two years and estimates that cement consumption will increase by 2.3% in 2019.
PCA says this represents a marginal slowing in the pace of growth when compared to the Fall 2018 forecast.
Ed Sullivan, PCA senior vice president and chief economist, says: “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.”
Additionally, rising state deficits have forced states to adjust budgets, reduce costs and re-prioritise 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 adds.
PCA’s analysis notes the labour 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 estimated 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. 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,” Sullivan concludes.