Coronavirus Regional Briefing:

South East Central & South Atlantic

David Lan, Senior Regional Economist
July 2020
 Covid 19’s impact to Cement Consumption

Indexed
140

120

100

80

60

40

20

0
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

East South Central U Scenario East South Central W Scenario South Atlantic U Scenario South Atlantic W Scenario

Source: PCA
 a

Job Market
Job creation strong until covid hits

U.S Employment Total Nonfarm

155,000

150,000

145,000

140,000

135,000

130,000

125,000

120,000

115,000
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

Source: BLS, PCA

 Jobs have started to rebound

Employment Change since February 2020 level(%)

Employment Share by Major Sector (2019)
Total Nonfarm Goods Producing Service-providing
0%

-2% 13.96%
-4%

-6%

-8%

-10%
86.04%
-12%

-14%

-16%

Goods Producing Service-providing

Feb - May Feb-Jun

5
Source: BLS, PCA
Hospitality sector is hit the hardest
Leisure and Mining and Professional and Transportation Education and Financial
hospitality Other services logging Information business services and utilities Retail trade healthcare Government Construction Manufacturing Wholesale trade activities
0%

-5%

-10%

-15%

-20%

-25%

-30%

-35%

Feb-Jun

Source: BLS, PCA

 Manufacturing sector is the stabilizing force

KY

7
Source: 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

 a

Residential Outlook
Pent-up demand lifts new home sales

New Home Sales, Index 2009=100

250.0

200.0

150.0

100.0

50.0

0.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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
One Family House - Median Squarefootage
2,700

2,600

2,500

2,400

2,300

2,200

2,100

2,000

1,900
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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

% Change in Jobs by Age Group

0
Gen Z Millenials GenX Boomers

-5

-10

-15

-20

-25

-30

Source: BLS
South east region will lead the recovery
Index, 2000=100

Residential Cement Consumption, Index 2000=100

160

140

120

100

80

60

40

20

0
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

East South Central South Atlantic National

Source: USGS, PCA 15

Resurgence of Covid19 may delay full recovery

Residential Cement Consumption, Index 2000=100

160

140

120

100

80

60

40

20

0
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

East South Central East South Central South Atlantic South Atlantic

Source: USGS, PCA 16

 a

Nonresidential Outlook
 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

US Retail & Food Service Sales Y/Y- June 2020

Food Services& Driking Places

Clothing & Accessories

Gasoline Stations

Electronicsc & Appliances

Health& Personal Care Stores

Futniture&Home Furnishing

Ttotal Retai& Food Services

General Merchinese Stores

Total Retail Alone

Total Retai Alone Minus Gasoline

Motor Vehicle& Parts Dealer

Food&Beverage Stores

Building Materials & Garden Equip,

Sproting Goods, Books, Hobbies

Non-Store Retailers

-30% -20% -10% 0% 10% 20% 30%

 Expect headwinds in non-residential cement consumption

East South Central South Atlantic

1,400 4,000

3,500
1,200

3,000
1,000

2,500
Metric Ton, in Thousands

Metric Ton in Thousands

800
2,000

600
1,500

400
1,000

200 500

0 0
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

East South Central East South Central South Atlantic South Atlantic

Source: USGS, PCA

 a

Public Outlook
 Reduction in Vehicle Miles Traveled Relative to COVID-19 Cases
Percent change in VMT the second week of April vs. first week of March

Source: University of California, Davis 25

 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

9,000 3,500

8,000
3,000

7,000
2,500
6,000

5,000 2,000
Thousands

Thousands
4,000 1,500

3,000
1,000
2,000

500
1,000

0 0

South Atlantic South Atlantic East South Central East South Central
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