Cement Americas provides comprehensive coverage of the North and South American cement markets from raw material extraction to delivery and tranportation to end user.
Issue link: https://cement.epubxp.com/i/49738
FEATURE FORECAST 2012 ginning of the residential recovery accounted for much of the in- crease in cement consumption that was previously expected for 2013. As a result, PCA now ex- pects relatively flat market condi- tions will persist through 2013. Seeming to concur with Sulli- van's expectations, McGraw-Hill Construction, part of The McGraw- Hill Companies released its 2012 Dodge Construction Outlook, which predicts that overall U.S. construction starts for 2012 will re- main essentially flat. The level of construction starts in 2012 is ex- pected to be $412 billion, follow- ing the 4 percent decline to $410 billion predicted for 2011. "The construction industry has struggled to see recovery take hold over the past couple of years. After plunging 24 percent in 2009, new construction starts leveled off in 2010 and have hovered within a set range during 2011," said Robert Murray, vice president of economic affairs, McGraw-Hill Construction. "The backdrop for the construction industry is the fragile U.S. economy, which continues to see slow em- ployment growth, diminished fund- ing from federal and state governments, and pervasive uncer- tainty. In 2012, the top-line num- bers are not expected to show much change, but there will be variation within the major con- struction sectors, with some gains predicted for housing and commer- cial building, assuming the U.S. economy avoids recession." FALSE START TO GROWTH A year ago, the economy seemed poised for stronger, sustainable economic growth. Due largely to the European sovereign debt crisis, consumer and business confidence waned. As a result, private sector growth entered a period of slow- down. Furthermore, ARRA stimulus decreased as a positive for eco- nomic growth, forcing the Federal Reserve to enact a new round of monetary stimulus to avert the po- tential of a double-dip recession. By late 2010 and early in 2011, the European debt crisis was tem- porarily resolved and faded from the public mind-set. This, coupled with the "payroll tax holiday" and Fed actions, led to a revival in eco- nomic activity. Real GDP, job growth and confidence recovered. Seemingly, the economy was on a sustainable path of stronger growth and job creation in excess of 200,000 a month. Once again, however, this has proven to be a false start to stronger, sustained growth. The political games played by Congress over the debt ceiling exerted adverse influence on near- term growth. The debt ceiling de- bate injected new uncertainty and risk onto the economic landscape. Consumers, business and bank confidence was already weak. This added a dose of risk hindered real economic activity. Sullivan says the economic re- covery from the Great Recession will be led by a strengthening in business, consumer and bank con- fidence. Lacking a sustained and decisive improvement on this front, private sector fundamentals such as job creation, investment and easing in lending standards will not be released in full force and com- mit the economy to a path of tepid improvement. Such a path sug- gests the continuation of a fragile economy and one that remains vul- nerable to even mild economic shocks that could lead to a con- traction in economic activity. This is the precarious condition the econ- omy has been in for two years. This first quarter of 2012 could represent a significant challenge to economic growth. The payroll tax and extended unemployment in- surance benefits will expire year- end. Federal aid to the states has already expired. Furthermore, The EIA expects energy prices will rise. www.cementamericas.com • November/December 2011 • CEMENT AMERICAS SPIKE IN PROJECTS IDLED BY FINANCING ISSUES Drawing on McGraw-Hill Construc- tion Dodge data, a new American In- stitute of Architects (AIA) report finds the share of projects—led by those in the education and multifamily sectors—stalled due to financing problems has nearly doubled since 2008. "Stalled Construction Projects and Financing" correlates the chal- lenges of construction financing to the incidence of stalled projects in the U.S. "The increased difficulties con- struction projects have experienced in securing financing is of real con- cern to our customers, and this re- port highlights its extent and impact on the overall U.S. economy and on jobs," says McGraw-Hill Construction President Keith Fox. "A July 2011 AIA survey of a nation- ally representative panel of architec- ture firms discovered that almost 70 percent had one or more projects at that time where work was stalled. There were a variety of reasons proj- ects were not moving forward, in- cluding general client nervousness, a generally weak economy, and an insufficient budget for the project as currently conceived. However, fi- nancing problems topped the list," AIA Economics and Market Research, and Government and Community Relations staff note in their report. "Difficulties in securing financing are widespread," they add. "Architec- ture firms report that residential, commercial and institutional con- struction projects all are subject to serious financing problems. And it is not only large, complex projects that are at risk … Projects with estimated construction costs of under $5 mil- lion account for almost half of all projects stalled due to lack of financ- ing, even in the commercial and in- stitutional categories. Only 15 percent of stalled projects have esti- mated construction costs in excess of $25 million." 11