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    Credit: The Freedonia Group, Inc.

Cement Consumption Slows

The Portland Cement Association (PCA) has lowered its annual cement consumption rate for 2006 from 3.5% to 2.3%. The 129.9 million tons extends a three-year period of growth. PCA, in its Summer Forecast 2006, expects a 1.2% increase for next year.

“Higher interest rates, oil prices, and inflation will slow consumer spending,” said Edward Sullivan, PCA chief economist. “These forces will result in a harsh decline in residential building and slow the recovery in nonresidential construction activity in 2006 and 2007.” Sullivan also expects slower job growth will contribute to a more cautious approach to public spending.

Noresidential building in the United States increased its pace the first half of 2006, partially taking up the slack from home construction, which has hit a wall. Commercial construction totaled $97.5 billion the first half of the year, a robust 17% increase over 2005, while residential building's $189 billion was just a 1% increase. Residential building the first half of 2005 increased 15%.

But nonresidential construction fell 4% in June, according to McGraw Hill Construction. Retail construction fell 22% from the previous month, while offices were down 6%, and warehouse construction fell 1%.

On the residential side, single-family housing construction fell 3% from its May levels, marking the fifth consecutive month it has declined. Multifamily housing dropped 17%.

Overall, construction increased 7% the first half of the year, led by the West (13% increase) and the South Central (12%).

PCA also says the tight market for cement the last two years has eased considerably. Only two states reported tight market conditions, compared to 30 in 2005 and 2004. Large increases in cement imports the first half of this year contributed significantly to the easing of supply.

For more, visit the Portland Cement Association's Web site at www.cement.org.

—Tom Bagsarian