PCA Adjusts Outlook Due to Slow Improvement in Labor Markets 8/8/2003
From: Ryan Puckett of the Portland Cement Association, 847-972-9136, rpuckett@cement.org, http://www.cement.org/newsroom SKOKIE, Ill., Aug. 8 -- Slower than anticipated improvements in the U.S. labor markets are at the heart of adjustments in the economic outlook on cement and construction by the Portland Cement Association (PCA). While the previous forecast scenario from PCA Economic Research remains essentially intact, adjustments in the current forecast primarily reflect changes in the timing of turning points. Labor markets have not yet succumbed to the logic contained in PCA's otherwise well-performing Spring forecast. PCA has pushed back its forecasted a turning point in the labor markets until October and reduced the magnitude of job creation following thereafter. "The labor market will sit near the no-job-loss, no-job-creation saddle point for a period of time," states PCA chief economist Ed Sullivan. "Despite recent employment data indicating improvements in labor markets and the rate of monthly job losses on an apparent decline, this scenario should play out even if the forthcoming July employment report confirms the turning point." Key forecast assumptions: -- The Federal Reserve will delay increasing interest rates until the second quarter of 2004. -- Single-family housing starts will remain strong through first quarter of 2004. -- Soft mortgage rate environment will adversely affect apartment demand, keeping vacancies high until the second half of 2004. -- Office building construction activity will not turn around until late 2004/early 2005 -- Overall nonresidential construction spending will be weaker than expected, but stronger consumer consumption will prompt an earlier than expected recovery in retail construction spending. -- Amplified financial stress on state governments throughout 2004. Cement Intensity PCA believes it is prudent to adopt a more conservative scenario with regard to the medium- to long- term growth path of cement intensities. Cement intensity refers to the amount of cement used per unit of construction dollar activity. The measure has been on a sustained decline throughout 2003 and PCA has adjusted down the implied intensities for the entire forecast horizon. A formatted version of this news release is available at http://www.cement.org/port/summer03forecast.asp. Complete forecast available at http://www.cement.org/port/summer03forecast.pdf. About PCA Based in Skokie, Ill., the Portland Cement Association represents cement companies in the United States and Canada. It conducts market development, engineering, research, education, and public affairs programs. |