At a press conference during last week’s 2018 World of Concrete in Las Vegas, Portland Cement Association (PCA) senior vice president and chief economist Ed Sullivan offered a glimpse at the association’s upcoming Spring Forecast for cement production and concrete construction. Sullivan noted that this will not be an easy momentum forecast despite fairly upbeat expectations as policy issues will eventually disrupt the drive – whether for better or worse.
Economic momentum supported by tax reform and federal infrastructure programs will play key roles in the demand for concrete construction in the years ahead. Sullivan stated that potential contribution to cement consumption from a Trump infrastructure plan can range from 1.5 to 2.0 million metric tons (Mt) in the first year to 6.5 to 7.5 Mt in the third year. However, a lack of clarity from the Trump administration leaves some guesswork on federal spending.
Sullivan said the strong economy comes in context of continued strain to find skilled workers, including those needed for construction projects. He also noted that recent immigration policies will add to the workforce shortage.
Weather conditions and other economic factors prompted the association to revise its 2017 Fall Forecast down slightly, though its fundamental assessments pertaining to the economy, construction markets and cement consumption remain on target.
“There is little doubt that the near-term outlook for construction and cement consumption in 2018 and 2019 remain favorable,” he said. “Strengthening economic conditions, with the addition of fiscal stimulus, and in the context of already low unemployment could awaken inflationary pressures. Down the road, this could lead to an even more stringent monetary policy, leading to an acceleration in interest rate increases and an eventual cooling of construction markets. If this scenario plays out, it will likely take time to gestate and not materialize to a significant degree until after 2019.”
The PCA Spring Forecast will be released during the first week of March.