Posted February 20, 2015

World of Concrete: Does Upbeat Event Predict an Upbeat Year?

According to the folks who run the World of Concrete, this year’s event was the largest in six years, drawing nearly 56,000 attendees to see more than 1,400 exhibiting companies. Manufacturers we talked with were pleased with the traffic and the interest, which may predict a good year ahead for you and your contractor customers.

The Portland Cement Association, an association representing the nation’s cement industry, sees a few good years ahead. Ed Sullivan, the organization’s chief economist, delivered his forecast on the economy, cement consumption and construction. Calling it “upbeat” would be selling it short.

Cement consumption, and the construction activity it reflects, is “supported by strong economic fundamentals and strong construction fundamentals,” Sullivan said, that should carry through the next three years.

Job creation is the foundation for optimism, he said, with better job prospects and income increasing consumer confidence and more spending. From a record lull, he added, we’re now see a remarkable and sustained gain in confidence.

Ultimately, this will help move the recovery into a higher growth phase in the years ahead. “Pent-up demand is what we’re talking about. And it is huge, unprecedented by a multiple of what we’ve ever seen in the past,” he emphasized.

For 2014, he noted, he had forecasted 8% growth and believes the year will show 8.2% growth in cement consumption. For 2015, he pegged growth at 8% again, and predicts total annual consumption will continue to rise through 2018, ending up slightly below the peak years of 2005 and 2006.

Sullivan expects a surge in cement consumption for residential construction – from 13 percent of consumption last year to 56 percent of cement consumed this year. Tremendous growth, “but remember, we’re starting from a very low base.”  While consumption still leans toward multi-family housing, the economically-important single-family construction will grow, but the depth of the recession, difficult-to-get loans and related factors are causing this sector to recover slowly.

On-going job creation will speed the recovery, he added, improving residential construction, putting upward pressure for non-residential construction “and when you hire a worker, you create a taxpayer,” which helps improve government balance sheets which can also support construction projects, including infrastructure repairs.

“Stronger economic growth will push through and formulate stronger construction activity,” he said. From his analysis and that of others, housing starts are expected to increase at a fast rate this year through 2017, then begin to flatten, growing more moderately through 2019.  

Mike Martin