The Portland Cement Association’s (PCA) fall cement consumption forecast for the U.S. projects a near-term demand decline of 3.5 percent for 2023.
According to PCA, this marks the first decline in 13 years and is expected to be short-lived, with growth returning in 2024 and beyond.
“Due to inflation and rising interest rates, economic growth is expected to remain sluggish through mid-2023 with unemployment reaching 4.7 percent,” says Edward Sullivan, PCA’s chief economist and senior vice president. “Inflation is expected to remain high, leading to further monetary policy tightening through this year and into early next.”
Residential cement consumption accounted for nearly 80 percent of growth in the demand for cement in 2021, according to PCA. This year, rising mortgage rates coupled with double-digit gains in home prices has resulted in a weakening in housing starts – a nearly 13 percent decline is expected in 2023, the association says.
Nonresidential construction is also expected to weaken as PCA says several nonresidential sectors have not recovered from COVID-induced downturns.
“Easing economic conditions typically result in higher vacancy rates and soft leasing rates,” Sullivan says. “In the context of net operating conditions expected for 2023, nonresidential construction will likely add to the declines originating from the residential sector.”
While the national infrastructure program will provide some relief in private sector construction, PCA says its near-term influence is likely to be modest given the time required between spending allocations and actual pouring of cement.
In 2024, PCA expects a modest recovery as interest rates begin to ease and more significant impact is felt from the infrastructure bill.
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