Low Oil Prices to Positively Impact Construction, PCA’s Sullivan Says

Low oil prices will benefit economic growth in the United States and are likely to add 20 to 30 basis points to real GDP growth rates during 2015-2016, said Portland Cement Association chief economist and group vice president Edward Sullivan at the World of Concrete trade show in Las Vegas this week.

However, Sullivan cautioned, the good news doesn’t necessarily travel with the same speed to the construction industry. “Unfortunately, the transmission process from oil price declines to construction activity contains timing lags,” Sullivan said. “The time it takes for oil prices to impact consumer/business behavior is short, but impacting the decisions to build is a longer process.”

Because of this lag time, Sullivan said, the construction industry would not be likely to feel the positive impacts in 2015, or even the first half of 2016. During this period, there will be a negative impact on construction projects related to energy drilling and employee wages in energy industry states. However, job growth and a growing economy will have a positive impact on cement consumption and overall construction, especially non-residential, in 2015.

The Portland Cement Association is based in Skokie, Ill.