PCA: Recovery starting in 2013

Economic factors will come together to create a “new normal” in cement consumption growth rates

News Portland Cement Association January 18, 2011
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Although the economy is gaining strength, a full recovery, in terms of cement usage, won’t be realized until 2013, according to the Portland Cement Association (PCA).

“Growth will be very tepid and will continue for another two years,” said Ed Sullivan, the chief economist for the PCA. However, he said this could change if job growth is stronger or if the highway bill is passed.

Several economic factors, such as tight lending standards, high unemployment and state budget deficits will play a key role in the recovery, Sullivan said. With the majority of states facing budget deficits, the PCA predicted roughly flat highway growth for 2011. Additionally, the group expects ARRA spending to fade over the next two years. However, Sullivan said he expects the industry to recapture one to two million metric tons of cement consumption in 2011.

This will help create a “New Normal” in construction. A pent-up demand is currently being generated that should be released with good job growth, but the timing and magnitude will be strongly affected by the economy. Also, the growth will vary from region to region.

Sullivan expects the residential, nonresidential and public sector construction to become synchronized starting in 2013. Although he cautioned that this most likely will not be a typical recovery, the synchronization usually suggests strong cement consumption growth rates.

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