1. Ed Sullivan Group VP, Chief Economist
U.S Cement Outlook
PCA’s Fall Committee Meetings
Ed Sullivan
Group VP, Chief Economist

2. Cement Data 2015 Monthly Metric Tons, SAAR
Volatility Adds to Uncertainty

3. 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%

4. Portland Cement Consumption Thousand Metric Tons=

5. Trade Weighted Value of $

6. Baltic Dry Index Proxy for Dry Bulk Freight Rates

7. Import Volume Metric Tons, SAAR

8. Import Volume Metric Tons, SAAR

9. Capacity Utilization
Spring Import Forecast =

10. 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

11. 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.

12. Net Job Creation Thousands Net New Jobs

13. GDP Error? Polynomial 3 Comparison
Employment Based GDP Estimate
Actual GDP

14. Inflation Rate CPIU Percent Change

15. Interest Rates Annual Percentage Rate
BAA Bonds
Fixed Mortgage

16. Home Prices Total: Existing & New
Most of Middle-Class Wealth is tied to Home Value

17. Consumer Sentiment Index: 2000 = 100

18. Consumer Sentiment Index: 2000 = 100

19. Federal Reserve Policy Assessment
Dual Mandate: Expansion/Jobs & Price Stability

20. Unemployment Rate Index: 2000 = 100
Natural Rate of Unemployment 5% 4%

21. Inflation Rate CPIU Percent Change
Fed Target Rate: 2%

22. Inflation Rate CPIU Percent Change
Fed Target Rate: 3.5%?

23. 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.

24. 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

25. 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.

26. Single Family: Structural

27. 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.

28. Housing Starts Thousands of Units
Housing Outlook
Housing Starts Thousands of Units

29. Housing Starts Thousands of Units
Housing Outlook
Housing Starts Thousands of Units

30. Multifamily Starts Share of Total
Starts Composition
Multifamily Starts Share of Total

31. 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

32. 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%

33. Oil Prices & New Rig Count Total
Rigs
Oil
Rig Count

34. Oil Cement Thousand Metric Tons

35. 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

36. 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

37. Public Construction Million Real $
Six Years Decline =

38. 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

39. Portland Cement Consumption Thousand Metric Tons=

40. Ed Sullivan Group VP, Chief Economist
U.S Cement Outlook
PCA’s Fall Committee Meetings
Ed Sullivan
Group VP, Chief Economist