US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Strong Year for Asphaltic Roofing Industry Indicative of US Construction Market

The recent production report of the Asphalt Roofing Manufacturers Association showed that US firms – after a solid year in 2020 – posted even stronger sales in 2021. Domestic production of asphalt shingles (the most commonly installed roofing material in the US) rose nearly 5% in 2021, while US manufacturing of modified bitumen membranes (MBMs) – one of the leading low-slope roofing materials installed in the US – advanced at a double-digit pace in 2021.

For asphalt shingles, this increase in production was spurred by high levels of housing starts as builders capitalized on demand for housing by erecting as many houses as they could (which, given shortages of lumber and other materials, was often a challenge!). Furthermore, reroofing activity in the US remained robust. While some of this work was in response to the many storms that occurred late in 2020, much of this demand for shingles was spurred by homeowners – flush with cash and buoyed by record home values and low interest rates – opting to fix and repair their residences. Many homeowners decided that 2021 was a good time to finally replace that aging roof – not only boosting home values, but adding a more durable and weather resistant product.

In the MBM segment, production was supported by a number of factors, key among them:

  • growth in the construction of such structures as manufacturing plants, warehouses, and self-storage centers, where MBMs are frequently specified due to their moisture resistance
  • the ease of installing these membranes, many of which feature self-adhesive peel-and-stick backings that facilitate use, especially by modestly trained installers
  • shortages (and higher prices) for plastic single-ply roofing membranes due to refinery shutdowns in Texas and Louisiana that lowered production of many of the plastic resins needed to make roofing membranes – MBMs were a much more affordable and available alternative

While it is still too soon to make broad predictions about the US roofing market for 2022, initial signs look good. Demand for housing remains high, while homeowners continue to invest in their residences, thus supporting demand for asphalt shingles. In the commercial market, the prospect of rebounding construction activity as the COVID-19 pandemic recedes should bode well for manufacturers of MBMs.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of Roofing studies in the Construction and Building Products catalog. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


December Retail Sales Report a Positive One for Building Materials Retailers

The release of the December 2021 retail sales report was in general a positive one for retailers of building materials and garden equipment and supplies. Sales in December declined around 3% from their November level. This monthly fall in sales activity can be attributed to a number of factors, such as:

  • supply chain difficulties that led to shortages of popular items often purchased at these stores, such as appliances
  • the onset of winter weather, which causes many DIYers and some contractors to put off outdoor work, such as the installation of decks – thus affecting lumber sales
  • the muted nature of many holiday gatherings due to the COVID-19 pandemic – many people delayed large family gatherings to minimize the risk of COVID, and thus put off purchases of gifts

For the year, though, overall retail sales by building materials and garden equipment and supplies were up 13.5% from 2020. This surge was spurred by:

  • high lumber prices – for most of the year, lumber prices remained well above their historical average
  • continuing high levels of housing starts and home remodeling activity, fueling demand for a wide range of building materials most often purchased at big-box retailers and hardware and garden stores
  • increased homeowner interest in outdoor activities, such as gardening, supporting purchases of seed, fertilizer, and related products

Industry professionals are remaining optimistic that the strong sales of 2021 will carry over to 2022. Home building and home remodeling activity remains high, while many consumers – despite rising inflation – are looking to upgrade their homes by replacing older appliances, applying a fresh coat of paint, and – once the weather clears – engaging in some landscaping work. 

TFG analysts will continue to monitor retail sales – as well as numerous other indicators – to gauge their effects on the US economy going forward.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Initiative to Repair Bridges to Benefit Construction Industry

The US government’s announcement of a $27 billion plan to repair older and unsafe bridges across the US is welcome news not only to state and local agencies charged with fixing and repairing these structures but to the US construction industry – those companies responsible for providing the materials and labor for these projects.

It’s long been known that the national network of bridges is in need of repair. While less than 10% of the bridges in the US were considered to be “structurally deficient” in the most recent report card of US infrastructure by the American Society of Civil Engineers, more than 40% of the nation’s bridges are more than 50 years old – and these structures will eventually some repair (if not outright replacement).

Many state and local governments tried to take advantage of the COVID-19 pandemic-related emptying of America’s roads and highways (due to the surge in working from home) by accelerating work on bridge repair since it is easier to complete projects when fewer vehicles are zipping by workers. However, this decline in road and highway traffic meant that consumers were spending much less on gasoline. This was an issue in many states, as taxes on gasoline play a major role in funding highway projects. Thus, less funds were available for bridge repair – making this spending initiative important for states looking to perform crucial infrastructure repairs.

This increase in funding will boost for a wide range of construction projects, such as:

  • cement and concrete
  • prefabricated concrete products, such as piers, pilings, and bridge sections
  • metal pillars, posts, and other structural supports
  • steel rebar to reinforce poured and prefabricated concrete components
  • lumber used as supports for concrete pours

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of studies in the Construction and Building Products catalog. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Rebounding Timber Prices May Lead to Reduced Lumber Prices

A recent article reporting on higher prices for harvested timber in the US reveals an interesting paradox: this increase in timber prices may actually lead to a decrease in lumber prices.

How, one wonders, is this the case?

Well, for some time low timber prices have discouraged owners of forestland from harvesting trees, as they would gain little, if any, profit. This has kept supplies of material to sawmills at a depressed level, making it more difficult for lumber producers to obtain necessary raw materials.

A rise in timber prices, though, will encourage foresters to increase tree harvesting. While there are many uses for harvested timber – corrugated material for the boxes increasingly being used to ship products to consumers a key example – a good share of this newly harvested timber will make its way to sawmills for processing into lumber. Blessed with the prospect of more regular supply, sawmills will expand production activities, thus boosting the amount of lumber available to home builders, contractors, other construction professionals, and homeowners engaged in their own DIY projects. For those who have been dealing with high lumber prices, any relief will be welcome!

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of studies in the Construction and Building Products catalog. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Increasing Multifamily Construction in 2022 a Boon to Housing Industry

The US continues to face a shortage of housing units, as evinced by strong housing prices and a lack of homes available for purchase on the market. However, the US also faces a shortage of multifamily housing (apartments and condominiums). These residences are equally important to the US housing market, as they provide homes for those unable or unwilling to purchase single-family residences. This cohort includes those with small households such as single people and empty-nesters, as well as retirees and others who prefer maintenance-free living. Furthermore, multifamily housing is often more affordable than single-family residences – an important consideration for those still struggling with the economic effects of the COVID-19 pandemic.

Therefore, a recent report stating that 2022 would be a strong one for multifamily housing is welcome news to the US housing industry. Increasing rents and rising property values make apartment construction a viable investment opportunity for firms looking for strong returns, while continuing demand for apartments and condominiums will encourage the construction of new complexes and the refurbishment of existing facilities. Many of these multifamily housing units will be located in urban areas, thus easing the shortage of affordable housing so often prevalent in many cities.

Increasing construction of multifamily housing units will also boost demand for a wide range of construction materials, key among them:

  • cement and concrete – used not only for the structures themselves, but also related facilities, such as parking garages
  • windows and doors
  • lumber – especially for prefabricated roof, wall, and floor trusses
  • drywall
  • plumbing fixtures and fittings
  • insulation

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of studies in the Construction and Building Products catalog. Freedonia Custom Research is also available for questions requiring tailored market intelligence.