Trade deals boost the outlook for the industry

By David Chereb| March 3, 2020

Source: S-C Market Analytics. | Click to enlarge.

Except for the deadly coronavirus, many of the headwinds are behind this economy.

The damage from the virus will be noticeable but temporary. The benefits from the new trade agreements with China, Canada and Mexico will begin to show positive results by this summer and keep jobs growing at a solid pace.

If there are no significant changes in policy going forward, the next few years look somewhat better than the outlook a few months ago.

Note: There is a small difference between our estimates of consumption and the USGS because of our own estimates in states where USGS does not report values due to competitive concerns. Source: S-C Market Analytics. | Click to enlarge.

Geographically, the outlook is positive for most states. Almost every state will increase aggregate consumption over the next two years. Coal country will be among the slowest growing regions, while the Southeast, Energy Belt and Mountain States will grow the fastest. Gains in the Midwest are increasing with a rebound in manufacturing.

The odds of a significant infrastructure program are growing, but getting a large program will be more difficult than the China trade talks. The chances for a sizable deal grow to more than 50 percent beyond 2020.

The default outlook is for continued growth in aggregate demand and solid gains in pricing.

Dr. David Chereb has many years of experience forecasting construction materials, and his web-based forecasting models have captured every major turning point in materials demand for more than 15 years. Chereb received his Ph.D. in economics from the University of Southern California. He can be reached at david.chereb@sc-marketanalytics.com.