Portland Cement Association's economic and construction outlook has changed modestly from its preliminary forecast released earlier this year, largely due to developments in the Middle East. The recent U.S. military/political victory in Iraq will increase the speed of economic recovery and the magnitude of economic growth for 2003. Success in the Middle East is expected to strengthen consumer sentiment, reduce oil prices, add support to an emerging recovery in the investment sector, and accelerate the job creation process.

Still, according to the May U.S. edition of PCA's The Monitor, while the first stage of an economic recovery is in place, the data supporting evidence of secondary stages of recovery are not yet in place. Despite the slightly more optimistic outlook for U.S. economic growth, construction spending is expected to decline modestly in 2003. While the speed and magnitude of 2003 economic growth is expected to improve, long lag times will forestall an improvement in overall nonresidential construction activity until 2004. Also, the improvement will do little to relieve states from current-year fiscal strains; compared to PCA's preliminary spring forecast, the public construction outlook remains basically unchanged.

The current PCA forecast has 2003 U.S. cement consumption coming in at just under 109 million mt, or 1.9% below 2002 levels. But with the expected upturn in 2004, consumption is predicted to reach 109.5 million mt next year, up 2.5 from anticipated 2003 levels, with a continued 3% to 4% increase every year after. In Canada, cement consumption is expected to reach 8.6 million mt in 2002 (up 1.5%) and 8.63 million mt (up 0.4%) in 2004, with increase of around 1.0% or less for the following few years. (For more on the Canadian economy, see the article below.)