Post on 22-Sep-2020
Coronavirus Regional Briefing:
South East Central & South Atlantic
David Lan, Senior Regional Economist
July 2020
Covid 19’s impact to Cement Consumption
0
20
40
60
80
100
120
140
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Indexed
East South Central U Scenario East South Central W Scenario South Atlantic U Scenario South Atlantic W Scenario
Source: PCA
Job Market
a
Job creation strong until covid hits
115,000
120,000
125,000
130,000
135,000
140,000
145,000
150,000
155,000
Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
U.S Employment Total Nonfarm
Source: BLS, PCA
Jobs have started to rebound
Source: BLS, PCA 5
13.96%
86.04%
Employment Share by Major Sector (2019)
Goods Producing Service-providing-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
Total Nonfarm Goods Producing Service-providing
Employment Change since February 2020 level(%)
Feb - May Feb-Jun
Hospitality sector is hit the hardest
Source: BLS, PCA
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
Leisure andhospitality Other services
Mining andlogging Information
Professional andbusiness services
Transportationand utilities Retail trade
Education andhealthcare Government Construction Manufacturing Wholesale trade
Financialactivities
Feb-Jun
Manufacturing sector is the stabilizing force
KY
7Source: BLS, PCA
No state is spared from hospitality job losses
Source: BLS, PCA
Construction employment bounced back faster than any other sectors
Source: BLS, PCA
Residential Outlook
a
Pent-up demand lifts new home sales
0.0
50.0
100.0
150.0
200.0
250.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
New Home Sales, Index 2009=100
New One Family Houses Sold: United States New One Family Houses Sold in South Census Region
Source: Census
Desire for homeownership remains upbeat
Source: Realtor.com
Expect larger homes to dominate new constructions
1,900
2,000
2,100
2,200
2,300
2,400
2,500
2,600
2,700
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
One Family House - Median Squarefootage
New Privately Owned Housing Starts Median Square Feet of Floor Area for One-Family Units in the South Census Region
New Privately Owned Housing Starts in the United States, Median Square Feet of Floor Area for One-Family Units
Source: Census
Multi-Family construction impacted by job losses in key demographic groups
Source: BLS
-30
-25
-20
-15
-10
-5
0
Gen Z Millenials GenX Boomers
% Change in Jobs by Age Group
South east region will lead the recovery
Source: USGS, PCA 15
Index, 2000=100
0
20
40
60
80
100
120
140
160
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Residential Cement Consumption, Index 2000=100
East South Central South Atlantic National
Resurgence of Covid19 may delay full recovery
Source: USGS, PCA 16
0
20
40
60
80
100
120
140
160
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Residential Cement Consumption, Index 2000=100
East South Central East South Central South Atlantic South Atlantic
Nonresidential Outlook
a
Despite lock down, office space continued to be leased
Source: JLL
More office space under construction means supply glut ahead
Source: JLL
Working from home will curtail urban retail construction
Source: BLS, PCA
Retail investments will move with housing to the suburbs,
Source: Realtor.com
So as the warehouses
-30% -20% -10% 0% 10% 20% 30%
Non-Store Retailers
Sproting Goods, Books, Hobbies
Building Materials & Garden Equip,
Food&Beverage Stores
Motor Vehicle& Parts Dealer
Total Retai Alone Minus Gasoline
Total Retail Alone
General Merchinese Stores
Ttotal Retai& Food Services
Futniture&Home Furnishing
Health& Personal Care Stores
Electronicsc & Appliances
Gasoline Stations
Clothing & Accessories
Food Services& Driking Places
US Retail & Food Service Sales Y/Y- June 2020
Expect headwinds in non-residential cement consumption
0
200
400
600
800
1,000
1,200
1,400
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
Met
ric
Ton
, in
Th
ou
san
ds
East South Central
East South Central East South Central
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Met
ric
Ton
in T
ho
usa
nd
s
South Atlantic
South Atlantic South Atlantic
Source: USGS, PCA
Public Outlook
a
Reduction in Vehicle Miles Traveled Relative to COVID-19 Cases
Source: University of California, Davis 25
Percent change in VMT the second week of April vs. first week of March
Budgetary deficit will impact full recovery
Note: Estimates are produced using projections based on enacted budgets for FY2020 and preliminary real GDP estimates for 2019. Budget balances are estimated by netting away the impact estimates from each states' total
resources, and subtracting the projected expenditures and other adjustments. 24 states are at risk of seeing their budget balance move into a deficit due to impact of the pandemic. Due to rounding, Ohio's budget balance
including rainy-day funds as a percentage of GDP does not show up as negative. *Due to data limitations, estimates for Georgia use the rainy-day fund balance from FY2018. **Due to data limitations, estimates are based on
preliminary FY2019 data for Michigan, North Carolina, Oklahoma and Wisconsin..
Source: TD Bank
Public sector cement consumption depends on when people start traveling again
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Tho
usa
nd
s
East South Central East South Central
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Tho
usa
nd
s
South Atlantic South Atlantic
Summary
• The risk of the second Covid wave is real as the number of covid 19 cases increases
• Second wave means delay in full recovery by one year
• Employment in our region have outperformed the rest of the country
• New single family home sales has picked up but weaknesses are seen on the multi side
• Supply glut of offices will weight on future investment in office spaces and impact cement
consumption
• Retail constructions will follow people’s movement to the suburbs, so as warehouses
• State and local governments need help to fund on-going construction projects as most of
them may run deficit next year
Coronavirus Regional Briefing:
South East Central & South Atlantic
David Lan, Senior Regional Economist
July 2020