Cement consumption forecast drops; lower prospective highway funding culprit

Source: Portland Cement Association, Skokie, Ill.

Uncertainty regarding highway spending legislation and government policy related to the debt crisis has caused the PCA cement consumption forecast to be downgraded from a 1.4 percent increase over 2010 figures to 0.2 percent for 2011. Additionally PCA Chief Economic Ed Sullivan’s recent forecast indicates 2012 figures will be nearly flat as well, with a downgrade of his 4.0 percent consumption increase to just 0.4 percent. According to Sullivan, the “previous forecast was based on the assumption that the new highway bill would be 20 percent higher than existing levels, but we now believe the funding will remain at current levels.”

Sullivan’s most recent report states that the economy’s slowdown will weaken construction activity and restrain gains in cement consumption until 2013, when he believes a significant 16.4 percent increase will occur. Sullivan notes that economic recovery from the Great Recession will be led by a strengthening of consumer, business and bank confidence. Without a sustained improvement, private sector fundamentals such as job creation, investment and ease in lending standards will not be released in full force and commit the economy to a path of improvement.

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