The Portland Cement Association (PCA) released its annual Spring Forecast, which envisions modest growth for cement consumption over the next two years.
PCA’s Market Intelligence Group estimates consumption to grow by 2.8 percent in both 2018 and 2019, and then to climb by 4 percent in 2020 as impacts from potential federal infrastructure spending are likely to take effect. The analysis estimates consumption at 99.3 million metric tons in 2018, 102.1 million in 2019 and 106.1 million by the end of 2020.
A variety of positive economic factors – such as a strong economy, job market and anticipated increase in infrastructure spending – “suggest a modest acceleration in real GDP, construction markets and cement consumptions,” said Ed Sullivan, PCA senior vice president and chief economist.
The PCA analysis projects that robust infrastructure spending isn’t likely to occur until the fourth quarter of 2019, given the key steps that must occur including passage of an infrastructure bill, federal and state paperwork, bid letting and review, and finally contract awards leading to construction.
Whatever infrastructure plan actually materializes, “it will take time to implement a construction infrastructure program from passage in Congress to the first shovel. This is an aspect often neglected by many economists,” Sullivan noted. “PCA has evaluated the time each process takes to impact actual construction activity. As a result, the timing of PCA’s impact of an infrastructure program on actual construction is later than most economists estimate.”
While interest rates and inflation are expected to see slight increases, consumer debt is low – thereby adding to potential growth in consumer spending.
“These factors suggest a modest acceleration in real GDP, construction markets and cement consumption,” said Sullivan. “Add in benefits from tax reform and we will likely see the economy improving at a more brisk pace.”