US Cement Market Set to Grow in 2016

An expanding economy should fuel increased construction in 2016, even if oil-rich regions see a drop.

SKOKIE, IL—An expanding economy and a recent move by Congress will help domestic cement consumption grow by as much as 5% percent in 2016, according to a report from the Portland Cement Association. Speaking at last week’s 2016 World of Concrete conference in Las Vegas, Edward Sullivan, PCA chief economist and group vice president noted that, “the fundamentals of our economy are sound. With the recently passed federal highway bill, and continued net increases in new jobs, we see clear indications that positive growth will continue.” Based in Washington, DC, with offices in Skokie, IL, a suburb of Chicago, the PCA represents American cement companies. It conducts market development, engineering, research, education, and public affairs programs. The association found that the US cement market recorded a 3.5% gain in 2015. At the end of 2014, PCA found that cement use had grown 8.2% that year, and forecast that 2015 and 2016 would see similar rates of growth. A slowdown in cement intensity was “a significant contributor to the revised forecast,” said S ullivan. Cement intensity refers to the tons of cement per dollar of construction activity. “The main indicators pointing to lower intensity levels are uneven regional construction activity, a slowdown in the number of starts, and the increase use of supplementary cementitious materials in concrete.” For example, lower oil prices have reduced demand for new homes and businesses in the energy-dependent regions of TX and ND. As reported in GlobeSt.com, about two years ago the latter state’s Bakken region was booming and most observers were forecasting endless expansion. Although last month’s jobs report was a bit of a hiccup, most recent monthly job gains have been quite healthy. The US Bureau of Labor Statistics reported that the economy created 151,000 jobs in January, but the unemployment rate sank to just 4.9%. And the prior three months each saw more than 250,000 new jobs. and stronger construction spending in 2016. PCA’s Market Intelligence Group, which provides data and insight on fundamental economic issues, will release an updated report on US cement consumption in March.