The Portland Cement Association‘s (PCA) Market Intelligence Group released its spring 2021 regional forecasts for the Northeast, Central, West and Southeast U.S. The forecasts cover cement consumption and real put-in-place construction spending.
Northeast
Despite being hit hard by the pandemic, PCA says Northeast cement consumption was able to grow 0.6 percent in 2020 – largely due to a strong start to the year. The association projects a flat growth of 0.1 percent in 2021.
The Middle Atlantic was down nearly 3 percent in 2020 while the East North Central and New England were up 1.9 percent and 4 percent, respectively. PCA says it expects cement consumption in the Northeast to rise by 1.1 percent in 2022. The increases are evenly spread over the three census divisions, with the Middle Atlantic moving up 1 percent, the East North Central moving up 1.1 percent and New England moving up 0.6 percent.
The residential market served as the primary growth engine of 2020 in the Northeast, PCA says, and this is expected to continue with a projected 5.7 percent growth rate in 2021. The rate of residential growth will lessen after 2021 but remain positive throughout the forecast horizon.
The commercial market will likely further decline in 2021 and 2022 due to pandemic-related business closures and economic scarring. PCA projects recovery will begin in 2023. From 2023 through 2025, the segment is projected to increase momentum each year and grow through 2025.
In the Middle Atlantic, public cement consumption is projected to decline 2.2 percent in 2021, on top of a 1.4 percent decline in 2020. PCA expects the Northeast to lag behind national trends in public cement consumption given state fiscal conditions and the characteristics of the region.
Central
In the West South Central census division, PCA expects cement consumption to grow 2.3 percent in 2021, following a decline of 2.5 percent last year. The regional decline in 2020 was largely attributed to a drop in oil-well cement demand, according to the association. Excluding oil-well cement, construction-related cement consumption grew 2.9 percent in 2020. The region maintains strong construction fundamentals given demand from strong in-migration and an expanding tax base, and growth is expected to be driven primarily by residential construction as well as slow, steady recovery in oil-well cement demand along with continued support from the public sector.
West North Central census division cement demand is expected to grow 1.2 percent in 2021, following an expansion of 7 percent in the previous year. The growth is expected to largely be driven by residential construction, particularly single-family homes.
High demand, low inventories and favorable relative affordability suggest residential cement consumption will expand 9 percent this year and more than offset expected declines in commercial cement consumption. Public cement consumption is anticipated to maintain the strong levels of activity experienced last year, PCA says. Cement consumption demand this year in the region is expected to reach levels not seen since 2006.
West
As the economy continues to recover from the impacts of the pandemic, the Pacific and Mountain regions’ cement consumption forecasts were revised slightly upward from PCA’s winter release.
Some states in the West, including Idaho, Utah and Oregon, returned to pre-pandemic employment levels. Only California, Nevada and Hawaii remain subnational in terms of job recovery, PCA says. The Mountain region is poised to outperform national economic growth while the Pacific region is expected to grow roughly in line with U.S. growth throughout the forecast horizon.
Growth in cement consumption in both regions is expected to be led by the residential sector. PCA projects single-family permits to grow 7.4 percent and 6.4 percent this year in the Mountain and Pacific regions, respectively. The nonresidential sector is expected to be slow on growth for both regions in 2021. Increasingly optimistic state budget projections diminish the likelihood of severe reductions in public construction spending.
PCA’s spring forecast does not include the effects of any federal infrastructure package. If an infrastructure bill were to pass, it would represent upside risk to public sector volumes toward the back end of the forecast horizon.
All totaled, the Pacific region is expected to be around 1.1 percent in 2021, PCA says. The Mountain region, which led growth in 2020 (11.5 percent) on gains in construction spending and cement intensities, is projected to drop slightly (0.7 percent) before returning to growth rates exceeding the national average.
Southeast
Cement consumption in the South Atlantic Census division will be strong, according to the association. PCA expects cement consumption to grow by 6.8 percent in 2021 and 2.1 percent in 2022.
While new home construction will do the heavy lifting, affordability concerns will likely weigh on single-family construction. Demand from home renovation is expected to increase as more owners tap into their home equity to finance larger projects. Warehouse construction will contribute to higher cement consumption, PCA says, while the office outlook remains uncertain. Tourist destinations in the region will likely see some recovery as leisure travel resumes.
Demand in the East South Central Census division is also expected to be positive. New construction will likely remain positive despite affordability concerns. PCA forecasts the oil and gas sector in Alabama will contribute to the strength as prices climb back from 2020’s low. Demand from the logistics and distribution sector in Tennessee will also drive cement consumption while Kentucky sees more investment from the manufacturing industry. Consumption is likely to increase by 7.6 percent in 2021 and 1.9 percent in 2022, according to the association.
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