2018 ACA Economic Climate Survey

By Allen Irish

Sales of existing homes, one of the major drivers of paint demand, have consistently averaged over five million units (annual­ized) for several years (as compared with a low of approximately 3.5 million in 2010). Overall construction spending has risen steadily since its recent low point in January 2011 and has consistently exceeded the level it last achieved during the height of the housing boom in early 2006 for more than a year now (Figure 2).

Going forward, overall construction spending growth is expected to remain moderately positive, although labor mar­ket constraints, along with increased ta­riffs, are flagged as potential dampers on construction activity. The most recent Fan­nie Mae™ forecast for residential construc­tion predicts that total housing starts will rise in 2019 and are anticipated to exceed 1.3 million, up from the 2018 forecast of 1.269 million, with single family starts ex­pected to rise 7.2% in 2019 (from 898,000 to 963,000), while multifamily starts are fo­recast to decline from 371,000 to 341,000 in 2019.2 The American Institute of Architects (AIA) Consensus Construction Forecast indicates that spending for nonresidential buildings in 2017 is projected to rise 4.7% in 2018%, and 4.0% in 2019.3

Similarly, the manufacturing sector, which is the primary driver of demand for OEM coatings, has continued to show strength since reaching its low point fol­lowing the 2007-09 recession. Overall manufacturing (new orders) has plateaued somewhat since May 2012, reflecting a number of factors, including increased imports, but the motor vehicle sector and consumer durables have shown strength since their 2009 lows (Figure 3). The NABE panel forecast is relatively optimistic, forecasting that 2018 industrial production will show 3.8% average growth with the outlook for 2019 being a median projected