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Economics Pulse: Construction materials update
Last year proved to be a year of mixed results for the construction materials sector. Production volumes increased in 2014, but not at the pace that many expected. Sales increased but profit margins struggled to show improvement. Stock prices for the sector’s public companies had an impressive start to the year but lagged the Dow Jones Industrial Average and S&P 500 for the year. The sector benefited from continued increases in both residential and nonresidential construction spending. At the same time, federal spending on transportation continued its nearly flat trajectory and received only short-term funding commitments. The sector is poised for significant growth; however, that will have to wait until the funding challenges at both the federal and state levels can be resolved. The Construction Materials Index (CMI) shown here presents the stock performance of the sector’s publicly traded stocks over a 10-year period (Figure 1) and for 2014 (Figure 2). As shown, the sector was one of Wall Street’s darlings during the residential construction boom (2004-2007), far outpacing the… Keep Reading
