Ed Sullivan Group VP, Chief Economist U.S Cement Outlook PCA’s Fall Committee Meetings Ed Sullivan Group VP, Chief Economist
Cement Data 2015 Monthly Metric Tons, SAAR Volatility Adds to Uncertainty
Cement Data 2015 Monthly Metric Tons, SAAR 6 Mo. Incremental: 7.9% 3 Mo. Incremental: 7.1% July Avg: 4.9% 3 Mo. Avg: 2.7% 6 Mo. Avg: 1.8% Model: 5.4%
Portland Cement Consumption Thousand Metric Tons =
Trade Weighted Value of $
Baltic Dry Index Proxy for Dry Bulk Freight Rates
Import Volume Metric Tons, SAAR
Import Volume Metric Tons, SAAR
Capacity Utilization Spring Import Forecast =
Economic Outlook Presentation Summary of Results Comparative Life Cycle Analysis Research Building Materials Single Family, Multi Family, and Commercial Structures Done By MIT Concrete Sustainability HUB
Economic Outlook Despite recent volatility in equity markets and concerns about global growth conditions, the fundamentals in the United States are sound and should support sustained growth in construction activity.
Net Job Creation Thousands Net New Jobs
GDP Error? Polynomial 3 Comparison Employment Based GDP Estimate Actual GDP
Inflation Rate CPIU Percent Change
Interest Rates Annual Percentage Rate BAA Bonds Fixed Mortgage
Home Prices Total: Existing & New Most of Middle-Class Wealth is tied to Home Value
Consumer Sentiment Index: 2000 = 100
Consumer Sentiment Index: 2000 = 100
Federal Reserve Policy Assessment Dual Mandate: Expansion/Jobs & Price Stability
Unemployment Rate Index: 2000 = 100 Natural Rate of Unemployment 5% 4%
Inflation Rate CPIU Percent Change Fed Target Rate: 2%
Inflation Rate CPIU Percent Change Fed Target Rate: 3.5%?
Federal Reserve Interest Rate Assumptions Strong dollar, weak global conditions, low oil prices, spot slack conditions and low wage rate gains suggest slow inflation increases. Unemployment data may underestimate slack in the economy. Some discussion regarding appropriate target rate of inflation. Past recession worst since post-WWII and recovery has been slow. Fed (Yellen) likely to err on over stimulate. Suggests a somewhat bigger window for raising rates (4th Q15 – 1st Q 2016). Rate increases probably smaller and longer time lapses between increases.
Housing Outlook Presentation Summary of Results Comparative Life Cycle Analysis Research Building Materials Single Family, Multi Family, and Commercial Structures Done By MIT Concrete Sustainability HUB
Housing Assumptions Focus on cyclical explanations for slow recovery in Single Family construction. Employment gains should leak through to stronger household formation and starts activity. Affordability favorable. Mortgage rates low. Focus on access to credit. BUT…… Structural changes may also explain slow recovery.
Single Family: Structural
Housing Assumptions: Millennials Aged 18-34 Form the basis of first time home buyers – the foundation for home construction growth. Millennials formed opinions on housing growing up during the crash, high foreclosures and home price declines. Millennials are saddled with huge student loan debt. Millennials marrying later. Millennials forming families later. Structural issue. Not a cyclical issue.
Housing Starts Thousands of Units Housing Outlook Housing Starts Thousands of Units
Housing Starts Thousands of Units Housing Outlook Housing Starts Thousands of Units
Multifamily Starts Share of Total Starts Composition Multifamily Starts Share of Total
Nonresidential Outlook Presentation Summary of Results Comparative Life Cycle Analysis Research Building Materials Single Family, Multi Family, and Commercial Structures Done By MIT Concrete Sustainability HUB
Nonresidential Recovery: Construction Details 2014 2015 2016 2017 2018 2019 2020 Nonresidential Buildings 8.0% 10.7% 5.3% 4.8% 4.2% Industrial 9.3% 7.1% 3.8% 3.6% 2.5% 1.9% Office 13.9% 15.8% 6.6% 3.5% 3.4% Hotels, Motels 6.3% 23.8% 3.9% 3.1% 3.0% Hospitals, Institutions -7.5% 12.2% 2.6% 2.8% 4.3% 6.4% 5.9% Religious -12.3% -1.5% -3.0% 0.8% 0.3% 0.6% 1.0% Educational -3.8% -2.1% -0.6% 1.4% 2.2% Other Commercial 17.6% 10.4% 8.1% 8.5% 8.6% 7.0%
Oil Prices & New Rig Count Total Rigs Oil Rig Count
Oil Cement Thousand Metric Tons
1 Metric Ton Oil Cement = 2.9 Metric Tons Other Construction Cement Oil Price Impacts 1 Metric Ton Oil Cement = 2.9 Metric Tons Other Construction Cement
Public Outlook Presentation Summary of Results Comparative Life Cycle Analysis Research Building Materials Single Family, Multi Family, and Commercial Structures Done By MIT Concrete Sustainability HUB
Public Construction Million Real $ Six Years Decline =
Summary Presentation Summary of Results Comparative Life Cycle Analysis Research Building Materials Single Family, Multi Family, and Commercial Structures Done By MIT Concrete Sustainability HUB
Portland Cement Consumption Thousand Metric Tons =
Ed Sullivan Group VP, Chief Economist U.S Cement Outlook PCA’s Fall Committee Meetings Ed Sullivan Group VP, Chief Economist