US cement consumption expected to climb 8% in 2014

Anxious US consumers are likely to be waiting on Congress to decide how much more debt the country can take on before the recovery can really take shape and push construction forward. The Portland Cement Association (PCA) has likened the debt ceiling talks, which resume early next year, to a critical moment of confidence for US citizens.

"American consumers love drama. Moreover, Congress knows how to create it, with more on the way when the debt ceiling talks resume in early in 2014," said Edward Sullivan, PCA group vice president and chief economist. "Each time the political circus on Capitol Hill addresses extensions of the debt limit, budget approvals or the fiscal cliff, it harms the burgeoning economic momentum."

Consumer and business confidence is a key ingredient for stronger economic gains, says Sullivan. Recessions generate pent-up demand to correct their imbalances. Large imbalances need a long correction process. While the economy is positioned for stronger growth, it needs a trigger to unleash this potential. The trigger lies with consumer and businesses' willingness to spend and reinvest in capital. Congress can easily derail recovery momentum with political drama created by the federal shutdown and debt ceilings.

The PCA expects 2013 cement consumption to reach nearly 80Mt, a 4.5 per cent increase over 2012. Consumption levels will reach 86Mt in 2014, an 8.1 per cent YoY gain.

During 2014, it is possible that all sectors of construction record growth – namely residential, nonresidential and possibly public. While the growth will be broad based, half of it anticipated for 2014 will come from residential construction activity where there is the largest amount of pent-up demand. The commercial and institutional sector will contribute another 25 per cent.

Typically, when each sector contributes to expansion, robust growth rates in cement consumption materialise. The PCA predicts real construction spending to rise by 1.3 per cent in 2013 and by eight per cent in 2014. Sullivan believes the trough point for roadway construction was reached in 2013. "Improving state finances could provide surpluses by 2015 that states can apply to neglected infrastructure spending."

By 2018, the end of the forecast horizon, Portland cement consumption is expected to reach nearly 119Mt - roughly three per cent below the past cyclical peak in 2005. This implies a 14-year recovery.