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PCA Adds to Rosy Forecasts for Cement Orders, Most Construction

PCA adds to rosy forecasts for cement orders, most construction

by ROB McMANAMY in Las Vegas | Feb 3, 2016

For anyone who doubts that this year's World of Concrete (WOC) is "a really big shew", all they need to know is that the event's chief prognosticator is a gentleman named Ed Sullivan. (For our Millennial readers, just Google that name.) 

PCA guru Sullivan. Photo: Equipment World

PCA guru Sullivan. Photo: Equipment World

As tens of thousands of attendees from all over the world were still thronging to Las Vegas this week for the annual concrete mega-mixer*, Sullivan, chief economist for the 100-year-old Portland Cement Association (PCA), helped to set a tone of continued optimism with an opening day address and press conference full of positive numbers, seasoned with only a pinch (or two) of longer range concern. 

“There’s a net increase of 200,000 new jobs being created every month,” Sullivan told the assembled trade press. “That penetrates every market of construction, and suggests continuation of positive growth."

Focused on PCA data for U.S. cement consumption, Sullivan said the U.S. FAST Act's signing in December only reinforces his already strong forecast for this year (See chart). After climbing just 3.5% in 2015, the national appetite for cement should rise by at least 5% this year, he predicted, and even more next year. He added that PCA will formally update its forecast next month to reflect the boost from FAST. 

"The (bipartisan) FAST Act should be praised," he added. Its increased federal transportation spending "will help overcome the effects of inflation, and also offset the drag due to lower oil prices.”

Brisk but sunny: Temps are lower than expected in Vegas this week, but spirits and attendance are both high.

Brisk but sunny: Temps are lower than expected in Vegas this week, but spirits and attendance are both high.

International concerns such as China's economic downturn and an overdue dive in asphalt prices cloud an otherwise sunny forecast. But for now, the economy remains "fundamentally sound", said Sullivan.

Overall, the opening day energy on the trade show floor reflected that optimism.

strength in numbers

"There are definitely more people here than last year, and that's a good sign," said one attendee who preferred not to be identified. Meanwhile, WOC show officials confirmed that the number of attendees, exhibitors, and even educational sessions all are up this year, and appear to be the best in seven years. "But we won't be releasing official numbers for at least another week," cautioned one WOC staffer.

As it is, last year's WOC attendance of 55,779 was up 20% from the prior year. And its 1,440 exhibitors represented a 17% increase over 2014. To accommodate all of that enthusiastic participation, exhibit space last year both inside and outside the Las Vegas Convention Center approached 700,000 sq ft. ALL of those numbers are expected to be higher still this year.

In other economic news, Wells Fargo Equipment Finance's 40th Annual Construction Optimism Quotient (OQ) index logged in as "highly optimistic", although it had dropped considerably from last year's all-time high. Still, the latest score of 108 is well above 75, the index threshold for a ranking of "optimistic". Nevertheless, Wells Fargo National Sales Manager John Crum still cautioned that a drop as steep as the most recent result is usually a sign of a market downturn in the next year or two.

* The source pun "concrete mixer" actually was coined by Don Berry, CEO of MagazineXperts LLC.

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