Concrete Consumption Poised to Slow
Lower attendance at the World of Concrete Show 2020 earlier this month seemed to confirm a more modest outlook for an industry anticipating lower demand from non-residential construction markets.
World of Concrete announced Feb. 13 that attendance at the show reached about 54,000, or 9 percent below last year’s record level. Show organizers said 1,310 companies, including 255 brand new companies, leased 700,000 net square feet of exhibit space for the event at the Las Vegas Convention Center. International presence was also robust with 237 companies from 29 countries outside the United States represented. That compared with more than 1,500 companies and 776,800 net square feet of exhibit space in 2019.
The show was bookended by economic forecasts that said the best prospects for growth in construction activity in coming years will have to come from residential markets.
The Portland Cement Association (PCA) kicked off the show Feb. 5 by forecasting cement consumption in 2020 will grow just 1.7 due largely to a decline in industrial activity. The forecast noted that stronger than expected residential demand could add a full percentage point to its outlook.
“The economy rests on two pillars, consumer spending and labor markets,” said PCA Senior Vice President and Chief Economist Ed Sullivan at a Feb. 5 press conference kicking off the trade show. “As long as the economy continues to grow and create jobs, the economy will remain on solid ground and continue to support cyclical portions of the cement market. But the economic recovery is aging and losing its zip. Economic growth will gradually slow along with construction activity and cement consumption growth rates.”
A forecast released by the American Rental Association Feb. 10 also anticipates a slowdown in manufacturing and industrial construction.
“Manufacturing activity will see virtually no growth in 2020 as the dollar remains high, tariffs continue, and the global economy slows,” noted Scott Hazelton, managing director, IHS Markit, the economic forecasting firm that compiles data for the ARA Rentalytics forecasting service. “Even the energy patch will see limited potential as oil prices sag under weak global demand. Absent a Highway Bill that is unlikely in the current political climate, nonresidential construction will contract, while residential construction only holds its own.”
While the ARA is forecasting total U.S. rental revenue to grow 3.8 percent this year, 4.1 percent in 2021, 4.2 percent in 2022 and 3.5 percent in 2023, the growth will be driven by rising penetration of rental construction equipment. The forecast also includes sales by party rental companies.
“This is one of the main factors that is keeping rental revenues growing faster than GDP [gross domestic product] and in the face of a flat outlook for construction spending,” said John McClelland, Ph.D., ARA vice president, government affairs, and chief economist.