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PCA's Sullivan: Constrained Growth in Cement Until 2013

PCA conducted its spring committee and Board of Directors meetings last week and there was quite a lot of activity to report, which we shall do this week, starting with the updated forecast from PCA Chief Economist Edward Sullivan. The news is mixed: While the economic recession is over and economic growth is strengthening, the construction recession may not run its course for another 18 months, hindering an improvement in cement consumption for the next two years, according to PCA’s forecast. In 2011, PCA anticipates marginal growth with a two percent increase in consumption.  However, this will increase to 8.5 percent in 2012 and swell to 18.5 percent in 2013 when all construction sectors—residential, commercial, and public—will be on the upswing.

“The economy clearly has entered a stage of self-sustaining growth, but impediments to a construction recovery are so large, that it will take until 2012 to see significant increases in activity,” Sullivan said. “Tight lending standards, declining property values, and reduced state infrastructure spending all need to be resolved for a true recovery in construction.” Sullivan expects two areas of nonresidential construction to grow in 2011:  oil/gas well construction and farm construction.  With high energy prices predicted for the next several years, oil well cement consumption is expected to record strength during 2011-2012 and beyond.  Farm construction activity is predicted to grow nine percent in 2011.

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