Portland Cement Association (PCA) Chief Economist and Group Vice President Edward J. Sullivan says low oil prices are beneficial to United States economic growth and are expected to add 20 to 30 basis points to real GDP growth rates during 2015-2016.
However, this good news for the nation’s economy does not necessarily travel with the same speed to the construction industry. “Unfortunately, the transmission process from oil price declines to construction activity contains timing lags,” said Sullivan. “The time it takes for oil prices to impact consumer/business behavior is short, but impacting the decisions to build is a longer process.”
As a result, Sullivan notes that there is little potential for positive impacts for construction activity resulting from lower oil prices that would materialize in 2015, or even during the first half of 2016. In fact it will have a negative impact on construction projects related to energy drilling and employee wages in energy industry states.
Despite this, job growth and a growing economy will have an overall positive impact on cement consumption this year. PCA expects only small increases in cement consumption arising from low oil prices in 2015 and beyond.