Although recent economic indicators point to a tempering of the U.S. economy, PCA is maintaining its forecast for steady growth in construction and cement consumption during the next five years.
A recent PCA forecast indicates a 7.9% increase in cement consumption for 2014, almost double from the 4.5% increase in 2013. The industry expects to see 10% growth in both 2015 and 2016.
“There is considerable evidence that the economy’s growth path has softened during the past several months,” PCA chief economist and group vice president Edward Sullivan said. “But we believe that the underlying economic fundamentals are stronger than the data suggest.”
Real GDP weakened considerably during the fourth quarter to 2.6% from 4.1% in the third quarter of 2013. Preliminary first-quarter estimates that GDP was essentially static, managing a meager 0.1% increase. Furthermore, consumer confidence has recorded setbacks, mortgage applications have recorded sustained weekly declines, the housing market has stalled, and real put-in-place construction activity has slowed.
The principal cause for the recent economic weakness, according to Sullivan, is the unusually adverse weather conditions across the United States during the fourth quarter of 2013 and first quarter of 2014.
“The weather conditions had an obvious impact on cement consumption – limiting construction and concrete use. The northern states and much of the east coast were hit hard, with year-over-year losses of as much as 25 percent,” Sullivan said. “However, despite this drag, nation-wide cement recorded gains. Through the first quarter, cement consumption increased 4.5 percent compared to the same period in 2013.”