Portland Cement Association recently released its summer forecast, detailing dramatic reductions in the tight market conditions that have prevailed for the past two years. A survey conducted by PCA showed that only two states reported tight market conditions, compared with 30 states in 2004 and 2005.
Cement consumption may reach 129.6 million tons this year if experts’ predictions are correct, continuing a three-year growth period. Consumption has increased by 2.3 percent compared with 2005 numbers, and additional growth is expected by 2007, some economists say.
According to Edward Sullivan, Portland Cement Association’s chief economist, consumer spending may slow down because of higher inflation, interest rates and oil prices. “These forces will result in a harsh decline in residential building and slow the recovery in nonresidential construction activity in 2006 and 2007,” Sullivan says.
In addition, Sullivan believes a slowdown in job growth may also contribute to a more cautious approach to public spending.
While Sullivan’s predictions may prove true, nonresidential construction activity hit an all-time high this June, with a seasonally adjusted annual rate of 0.3 percent. And although the cost of materials is rising and causing delays for projects, Ken Simonson, chief economist for the Associated General Contractors of America has said that he believes the economy will continue to boost nonresidential construction for the remainder of the year.
