Concrete Products

DEC 2018

Concrete Products covers the issues that attract producers of ready mixed and manufactured concrete focusing on equipment and material technology, market development and management topics.

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Page 47 of 83

46 • December 2018 LIMITED CEMENT GAINS Corresponding to the deceleration in construction starts, the Portland Cement Association Market Intelligence Group cement consumption forecast paints a limited growth pattern from 2017 levels, with this year trending a 2.9 percent gain, followed by 2.6 percent and 1.6 percent bumps in 2019-2020. "We are expecting relatively modest but sustained interest rate increases after 10 years of low and stable rates," says PCA Senior Vice President and Chief Economist Ed Sullivan. "The Federal Reserve's actions will gradually slow the construction sector's growth due to higher mortgage rates for residential buildings and higher borrowing costs for nonresidential buildings. While the tax cuts passed at the end of 2017 have helped to boost the overall economy, rising debt will frame the discussion of future federal public infrastructure spending." PCA's overall projection for the U.S. economy suggests considerable strength that will take time to unravel. The seeds of a gradual soft- ening will surface from rising interest rates; emergence of state-level fiscal difficulties at a time of relative prosperity; and, aging of the recovery. PCA forecasts the GDP growth rate to be 3.1 percent this year, 2.7 percent in 2019, and 2.2 percent in 2020. The unemployment rate now below 4 percent is expected to trend down—intensifying labor shortages and leading to stronger wage gains. "America's economy is unquestionably strong and resilient," Sulli- van affirms. "The real GDP growth is healthy, wage growth is up, and both the unemployment rate and consumer household debt are at near record lows. While interest rates are rising, they have not reached a threshold that would cause a significant adjustment to the positive overall growth projections." 2018 REFLECTION Thanks to the strong economy, producers saw modest growth this year despite severe weather impacting key markets in the third quar- ter, and hope to continue that momentum in 2019. Martin Marietta Materials Inc. reported record results for the third quarter ended September 30, with total revenues of just over $1.2 billion versus just under $1.1 billion for the prior-year period. "Our record third-quarter results demonstrate Martin Marietta's strong execution as we capitalized on the improving strength of the current construction cycle while successfully managing through near-term challenges," says Ward Nye, chairman, president and CEO of Martin Marietta. "In September, extraordinary weather challenges, including record Texas rainfall and devastation from Hurricane Flor- ence, mostly in the Carolinas, adversely impacted our third quarter. As a result, Texas, our largest state by revenues, and North Carolina, our third-largest state by revenues and leading state by unit profitability, were disproportionately negatively affected during the industry's busiest and most profitable period." FEATURE MARKET OUTLOOK 2019 vacancy rates are expected to rise as the economy slows, slightly dampening construction for offices and warehouses. The omnibus federal appropriations bill passed in March provided greater funding for transportation projects that will carry into 2019.

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