Economic Resilience in the Face of Weakening

Introduction

The week's economic data painted a picture of remarkable macroeconomic resilience --- with nonfarm payrolls increasing well above expectations at 115,000 new jobs created in April, the services sector expanding for a 22nd consecutive month, and a trade balance running 55% below year-ago deficit levels on a cumulative basis. But beneath the surface, forward-looking signals suggest the full weight of geopolitical and inflationary pressures has yet to arrive. For cement consumption specifically, the internals of this week's reports warrant careful attention.

The most telling data point of the week came from the ISM Manufacturing PMI. The headline reading of 52.7% --- matching March and marking four consecutive months of expansion --- confirmed that the broader economy continues to grow. But it was the Prices Index that commands attention, surging to a level not seen since 2022 and a clear signal that energy-driven inflation from the Middle East conflict is already working through supply chains. The ISM Prices spike may well be the first real-time evidence that the conflict's economic impact is beginning to register --- and it is almost certainly an early, incomplete read rather than a full reflection. If this is accurate, no Federal Reserve rate cut is coming anytime soon.

Construction put-in-place, released Thursday for both February and March, told a more complicated story. The headline was modestly positive --- total nominal spending rose 0.6% in March, beating expectations --- but after inflation these numbers turn negative. Nominal public infrastructure spending fell on the month, with highways, transportation, and educational construction all declining. Non-residential private construction is now down more than 2% year-over-year, with manufacturing-related construction collapsing 17% since March 2025.

The only genuine bright spot was residential, where a surge in single-family starts lifted overall spending. That residential strength carries an important asterisk: building permits fell 10.8% in March, suggesting the starts bounce reflects earlier demand pull-through rather than sustainable acceleration. Rising mortgage rates and surging builder input costs --- directly visible in the ISM Prices data --- cast a long shadow on whether residential momentum can hold.

The bottom line for cement consumption is one of bifurcation and possibly a delayed reckoning. The two highest cement-intensity categories --- public infrastructure and non-residential construction --- are weakening simultaneously. Residential offers some offset but faces real forward-looking headwinds. The data this week largely predates the full transmission of geopolitical energy shocks into project economics, financing costs, and contractor behavior. The ISM Prices surge is the warning shot. This morning's jobs number, strong as it is, paradoxically reinforces that warning --- a resilient economy with surging input costs and no Fed relief is not the constructive backdrop the cement market needs. The conditions ahead may be quietly deteriorating even as this week's headlines suggest otherwise.