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