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Chereb: More growth is on the horizon for aggregate producers

By |  May 3, 2021
David Chereb

Chereb

The proposed infrastructure bill is large, but roads and bridges are a small percentage of the total. Even so, the additional funds going into traditional infrastructure will be welcome and drive aggregate demand higher over the next few years. 

This is in addition to a rapid 2021 growth economy that will boost housing construction by 10 percent or more.

We raised our aggregate outlook due to the stimulus that is already beginning to flow through the economy, as well as because of the success of the vaccine distribution that is allowing the economy to open up.

Construction segments

By segment, residential construction will see the biggest boost in 2021 as record-low inventory, low mortgage rates and higher personal income all provide support for higher demand.

Although aggregate consumption was estimated to be down in 2020 compared to 2019, David Chereb Group's forecast projects 2021's consumption level to surpass 2019's. Chart/table: David Chereb Group

Although aggregate consumption was estimated to be down in 2020 compared to 2019, David Chereb Group’s forecast projects 2021’s consumption level to surpass 2019’s. Chart/table: David Chereb Group

Nonresidential, which suffered the most from the COVID slowdown, will hit bottom this year and begin a modest upward climb in 2022 and beyond. All of the structural changes from before COVID (i.e., the Amazon effect, remote workers) are still in play. Nonresidential – especially dense urban areas – will see the slowest gains over the next three years.

Nonbuilding will gain strength as the year progresses and be strong in 2022 and 2023. We are now assuming the “infrastructure” bill will only have a modest amount of new annual funds for traditional infrastructure. But the growing economy will be enough to boost nonbuilding aggregate demand by more than 10 percent (from 2020 to 2022).

Regionally, the Sun Belt will continue to outpace most other regions, with flight from high-tax, high-crime, dense urban Northern cities, continuing. Add to this a resurgence of less dense suburban areas from every state.

Aggregate pricing strength will return by mid-2021 in most areas.

David Chereb Group, Ph.D., is with David Chereb Group (DCG), which produces customized market forecasts by major segment of construction, from the county level up. Clients use DCG market intelligence reports for business planning and acquisition analyses in aggregate, ready-mixed concrete and cement. Visit davidcherebgroup.com for more information.


Featured photo: P&Q Staff


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