The Aggregates Industry is at a Transition Point as 2025 Begins. So Where Will We Go From Here?
By Mark S. Kuhar and Josephine Patterson
As we head into 2025, we do so with encouragement, but also uncertainty.
The Infrastructure Investment and Jobs Act (IIJA) – which made the single largest dedicated investment in American transportation infrastructure since the construction of the Interstate Highway System in the 1950s and 1960s – is now heading into its fourth year of funding. IIJA will provide $62 billion in funding for Fiscal Year 2025, an increase of $18.8 billion in formula programs compared to Fiscal Year 2021, the last fiscal year before the law was implemented. This funding is distributed annually by FHWA based on Congressionally mandated formulas.
There is no easy way to say it: aggregates production, which was projected to increase steadily during the implementation of IIJA, actually decreased through three quarters of 2024. The estimated production for consumption in the first nine months of 2024 was 1.79 billion metric tons (Gt), a decrease of 6% compared with that in the same period of 2023, according to U.S. Geological Survey (USGS) Commodity Specialist Jason Christopher Willett. There is no evidence that fourth-quarter results will be much better.
Reasons are varied, but weather has been a major factor, according to reports from the publicly traded companies.
“Looking ahead to 2025 and beyond, we expect to benefit from record levels of federal and state investments in highways, streets and bridges,” stated Ward Nye, chairman and CEO of Martin Marietta. “Additionally, reshoring and the build-out of artificial intelligence infrastructure should provide steady growth in these aggregates-intensive end markets for years to come. Further, although higher interest rates continue to affect residential construction activity, we are encouraged by recent Federal Reserve policy actions and the likelihood of more interest rate cuts later this year, which should support a recovery in housing and, subsequently, light nonresidential construction activity.”
Tom Hill, Vulcan Materials’ chairman and chief executive officer, concurred with Nye. “While significant weather disruptions have impacted construction activity through the first nine months of the year, overall demand fundamentals continue to underpin long-term growth,” Hill said.
It is also important to point out that despite the decrease in production, the profitability picture is still quite positive for the publicly traded companies, due to sound financial management and an increased pricing environment.
Election Impact
The National Stone, Sand & Gravel Association (NSSGA) has high hopes for 2025. “It looks to be a busy year in Washington,” Michele Stanley, NSSGA, interim CEO, executive vice president and chief advocacy officer told Rock Products. “The 119th Congress and the new Trump Administration will take over the governing reins, which has many implications for the aggregates industry. We are optimistic that the next year will include a tax reform package with business-friendly provisions, as well as the start of the next highway transportation bill process. Throughout the next year, NSSGA will advocate for policy wins in Washington that benefit all members and advance our industry.”
The Nov. 5th election brought positive news on the infrastructure legislative front. Transportation funding measures tracked by the American Road & Transportation Builders Association (ARTBA) Transportation Investment Advocacy Center (TIAC) appeared on ballots in at least 25 states, with 23 states approving at least one statewide or local question.
Voters approved 77% of 370 state and local ballot initiatives that are expected to generate $41.4 billion in new and renewed funding for roads, bridges, trails and rails, according to ARTBA. Some revenue will be available immediately through bond agreements, while most will be generated through sales, property or other taxes collected gradually over as many as 30 years.
“The support for these ballot measures during one of the most consequential national election cycles in modern history proves that transportation investment continues to transcend partisan politics,” said TIAC Senior Director of State Funding Policy Carolyn Kramer Simons. “Voters from all parties and geographic areas agree on the need to invest in roads, bridges, and transit infrastructure.”
When it comes to the short-to-medium-term expectations for the future of the equipment manufacturing industry and the agriculture and construction markets it serves, it seems safe to say opinions are mixed, according to Association of Equipment Manufacturers (AEM)
AEM Senior Director of Business Intelligence Al Melhim and GlobalData Construction Economist Tom Hogood said:
- U.S. construction market growth is expected in 2024 on the heels of about 3% growth a year ago.
- Five out of six sectors are expected to experience growth in 2024, with residential construction being the only one expected to see a decline. The highest growth areas are projected to be infrastructure and energy/utilities.
- Growth in infrastructure will be driven by government policies such as the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA).
- Interest rates are expected to fall, which bodes well for a residential construction market that has struggled due to higher rates in the past and present term.
There are concerns in some corners that the new Trump Administration, via some of the recommendations contained in the Project 2025 framework, might have designs on rolling back the IIJA. Madeline Ruid, writing for investment firm Global X, said that fear may be unfounded. “The election outcome creates heightened policy uncertainty over the short term, but we maintain our view that the IIJA and the Chips and Science Act are likely safe from rollback,” she stated.
Trump Administration cabinet nominations began rolling out in mid-November. Developing relationships with executive branch officials is a key part of AEM’s strategy with any new administration. These positions shape policies and action that could present opportunities and challenges for the equipment manufacturing industry and the sectors it supports. Post-election, here are the ones AEM is watching closely.
- Secretary, U.S. Department of Commerce (DOC) – Howard Lutnick was tapped to lead the department that is charge of bolstering U.S. global competitiveness. If confirmed, he is expected to dutifully and vigorously implement President-elect Trump’s proposals on tariffs. AEM said it will be monitoring these proposals and proactively educating Lutnick on how tariffs and other trade restrictive measures will have dire consequences for equipment manufacturers in the United States, including higher costs, disrupted supply chains and reduced market access.
- Secretary, U.S. Department of Labor (DOL) – Outgoing U.S. Rep. Lori Chavez DeRemer (R-Ore.) is no stranger to the equipment manufacturing industry and AEM. She brings an interesting perspective to the role, arguably being one of the most pro-labor Republicans in the House. She toured ConExpo-Con/Agg in 2023, as well as the Celebration of Construction on the Mall that same year. She is supportive of several policy updates that would build the next generation of workers for the equipment manufacturing industry.
- Secretary, U.S. Department of Transportation (DOT) – Former Rep. Sean Duffy (R-Wisc.) hails from AEM’s home state and by extension, has a familiarity with the equipment manufacturing industry. If confirmed, he will play a key role in reauthorizing a new highway bill and assume oversight of funds still not allocated under the Bipartisan Infrastructure Law (which expires in 2026). Duffy could also be looked on to ease regulatory burdens currently facing the transportation construction industry.
- Administrator, U.S. Environmental Protection Agency (EPA) – Former Rep. Lee Zeldin (R-N) is being tapped to significantly roll back recent regulatory moves made by EPA around climate change and energy production. He will also be expected to serve as a check on environmental standards coming out of California. Zeldin has a history of working across the aisle and approaching climate-related policy issues with a moderate and balanced lens.
- Ambassador, U.S. Trade Representative (USTR) – Jamieson Greer is no stranger to the role of USTR, having served as chief of staff to former Trump administration USTR Robert Lighthizer. AEM anticipates that his approach to tariffs will mirror that of President-elect Trump and DOC nominee Howard Lutnick.
AEM issued congratulatory statements for several nominees and will be weighing in with Senate stakeholders as the nominating process for each gets underway in 2025. AEM is proactively in touch with President-elect Trump’s transition team and directly with several of the nominees to ensure they are briefed on our policy priorities and ensure equipment manufacturers are top of mind.
Aggregates Production
An estimated 671 million metric tons (Mt) of total construction aggregates was sold or used in the United States in the third quarter of 2024, a decrease of 7% compared with that in the third quarter of 2023. As stated earlier, the estimated production for consumption in the first nine months of 2024 was 1.79 billion Gt, a decrease of 6%.
The estimated production for consumption of construction aggregates in the third quarter of 2024 decreased in seven of the nine geographic divisions compared with that sold or used in the third quarter of 2023. The New England and Middle Atlantic states were the only regions to show increases.
The five leading states in descending order of production for consumption were Texas, California, Ohio, Pennsylvania and Florida. Their combined total production for consumption was 201 Mt, a decrease of 6% compared with that in the same period of 2023.
The five leading states combined total production for consumption in the first nine months of 2024 was 553 Mt, a decrease of 6% compared with that in the same period of 2023 and represented 31% of the U.S. total.
An estimated 410 million metric tons (Mt) of crushed stone were sold or used in the United States in the third quarter of 2024, a decrease of 6% compared with that in the third quarter of 2023. The estimated production for consumption in the first nine months of 2024 was 1.11 Gt, a decrease of 5% compared with that in the same period of 2023.
The estimated production of consumption of crushed stone in the third quarter of 2024 decreased in six of the nine geographic divisions compared with that sold or used in the third quarter of 2023. The New England, Middle Atlantic and Pacific states showed increases.
The five leading states in descending order of production for consumption were Texas, Pennsylvania, Ohio, Missouri and Florida. Their combined total production for consumption was 143 Mt, a decrease of 4% compared with that in the same period of 2023.
An estimated 261 Mt of construction sand and gravel was sold or used in the United States in the third quarter of 2024, a decrease of 8% compared with that in the third quarter of 2023. The estimated production for consumption in the first nine months of 2024 was 684 Mt, a decrease of 6% compared with that in the same period of 2023.
The estimated production for consumption of construction sand and gravel in the third quarter of 2024 decreased in eight of the nine geographic divisions compared with that sold or used in the third quarter of 2023. New England was the only region to show an increase.
The five leading states in descending order of production for consumption were California, Texas, Minnesota, Michigan and Arizona. They’re combined total production or consumption was 96.0 Mt, a decrease of 10% compared with that in the same period of 2023.
Also, the U.S. total for 2023 was revised using full-year sales data provided by the companies. The revised U.S. total of crushed stone in 2023 was 1.55 Gt. The revised U.S. total of construction sand and gravel in 2023 was 967 Mt. The previously reported estimated annual output of crushed stone produced for consumption in 2023 was 1.54 Gt. The previously reported estimated annual output of construction sand and gravel produced for consumption was 922 Mt.
Portland, including blended, cement consumption was estimated to have decreased by 7% in the third quarter of 2024 compared with that of the third quarter of 2023. Consumption in the first nine months of 2024 was estimated to have decreased by 6% compared with that in the same period of 2023. This information was obtained from the USGS monthly survey of U.S. cement producers.
Construction Aggregates Market
According to report by Persistence Market Research, the construction aggregates market has shown robust performance in recent years. Sales reached $310.9 billion in 2018, and by 2023, sales surged to $392.4 billion, marking a 4.3% year-on-year increase.
Analysts project a compound annual growth rate (CAGR) of approximately 6.8% from 2024 to 2030, driven by factors such as urbanization, industrialization and increasing infrastructure investments. By the end of 2030, the market is expected to surpass $750 billion, propelled by the demand for construction materials in residential, commercial, and infrastructure projects.
Several factors are driving the growth of the construction aggregates market, including:
- Infrastructure Development: Increasing investments in infrastructure projects, such as transportation networks, airports and energy facilities, are driving the demand for construction aggregates worldwide.
- Urbanization and Population Growth: Rapid urbanization, particularly in emerging economies, is fueling the need for residential and commercial construction, driving the demand for construction aggregates.
- Reconstruction Activities: Reconstruction efforts in regions prone to natural disasters, coupled with ongoing urban renewal projects, are contributing to the demand for construction aggregates.
- Technological Advancements: Innovations in extraction techniques, such as advanced drilling and blasting methods, are enhancing operational efficiency and reducing environmental impact in the production of construction aggregates.
Despite the positive growth outlook, the construction aggregates market faces challenges such as regulatory constraints, environmental concerns and logistical constraints. Issues related to permitting, land use regulations and community opposition can hinder the expansion of aggregate extraction operations.
Additionally, the transportation of aggregates over long distances incurs logistical challenges and environmental costs, necessitating the development of localized supply chains and alternative transportation modes.
Construction Outlook
According to JLL’s 2025 U.S. Construction Outlook, we find ourselves at a unique crossroads. The first three quarters of 2024 brought welcomed consistency in costs and the start of interest rate cuts alongside high levels of activity. This period saw increased construction spending volumes and a general absorption of costs, painting a picture of a healthy sector bridging over a downturn in starts caused by a difficult financing environment. The report states:
“However, as we navigate the closing months of the year, we’re reminded of the dynamic nature of our global landscape. New variables were introduced into our outlook, from shifts in international relations to domestic political developments. Natural disasters brought unprecedented challenges across the Southeast, redirecting the expected trajectory of development and highlighting the importance of sustainable, resilient construction, while major changes in the political landscape introduced uncertainties in economic policy.
“While these factors introduced uncertainty, they also present opportunities for innovation and adaptation – hallmarks of our industry’s strength. While changes in regulatory, fiscal and trade policies will take time to solidify, the fundamental need for transformative growth in the built environment and areas of focus for CRE stakeholders remain clear.
“The construction industry’s incredibly strong performance in 2024 will be followed by a more modest 2025. The Architectural Billings Index reported contractions for nine of the last 12 months and starts have been at record lows; impacts that will appear in the spending data over the next few months.
“Nevertheless, interest rate cuts and increased loan originations, should make for a robust round of starts in late 2025 and drive net spending growth for the year. However, federal policy changes may alter this trajectory, potentially affecting factors such as infrastructure spending, trade policies and regulatory environments.
“Going forward, leaders should anticipate continued evolution in demand while preparing for potential complications. Economic, political and environmental factors on project feasibility across diverse regional markets are changing rapidly.”
Construction Spending
Construction spending during October 2024 was estimated at a seasonally adjusted annual rate of $2,174.0 billion, 0.4% (±1.2%) above the revised September estimate of $2,164.7 billion.
The October figure is 5.0% (±1.5%) above the October 2023 estimate of $2,071.1 billion.
During the first 10 months of this year, construction spending amounted to $1,814.8 billion, 7.2% (±1.2%) above the $1,693.2 billion for the same period in 2023.
In October, the estimated seasonally adjusted annual rate of public construction spending was $497.6 billion, 0.5% (±2.0%) below the revised September estimate of $500.0 billion.
- Highway construction was at a seasonally adjusted annual rate of $141.1 billion, 0.7% (±5.3%) below the revised September estimate of $142.1 billion.
- Educational construction was at a seasonally adjusted annual rate of $105.3 billion, 0.4% (±2.5%) below the revised September estimate of $105.7 billion.
Spending on private construction was at a seasonally adjusted annual rate of $1,676.4 billion, 0.7% (±0.7%) above the revised September estimate of $1,664.7 billion.
- Residential construction was at a seasonally adjusted annual rate of $934.0 billion in October, 1.5% (±1.3%) above the revised September estimate of $920.3 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $742.3 billion in October, 0.3% (±0.7%) below the revised September estimate of $744.4 billion.
“Total construction spending rose sharply in October, but that was entirely due to a sharp increase in residential activity,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “Nonresidential construction spending contracted for the month, and the declines were widespread, with spending down in 11 of the 16 subsectors. The 3.9% increase in nonresidential spending over the past 12 months is the smallest since December 2021.
“Some of October’s nonresidential weakness and residential strength can be attributed to hurricanes Helene and Milton,” said Basu. “The storms stalled work on several projects in North Carolina and Florida and initiated a massive increase in residential repair work. Construction of new housing units is actually down slightly over the past year, while spending on renovations and repairs is up by a robust 18.5%.
“The effects of these storms on construction spending dynamics should largely dissipate by the end of the year,” said Basu. “Given that a majority of contractors expect their sales to increase over the next six months, according to ABC’s Construction Confidence Index, there’s reason to expect nonresidential construction spending to rebound in the coming months.”
Associated General Contractors of America (AGC) officials said construction has yet to begin on many federally funded projects amid lengthy regulatory reviews.
“Despite a flurry of project announcements by the federal government, much of the money still has not been awarded in construction contracts, let alone work under way,” said Ken Simonson, AGC chief economist. “At the same time, major private categories are growing more slowly or shrinking.”
Association officials urged the incoming Trump administration and Congress to explore ways to accelerate federal permitting reviews for infrastructure and construction projects. They also urged the new administration to give federal agencies greater flexibility in complying with new Buy America rules. For example, agencies need to be able to provide waivers when no domestically produced materials are available.
“There is no reason the federal government can’t hold projects to the same high standards and still complete required reviews in months, instead of years,” said Jeffrey D. Shoaf, the association’s chief executive officer. “Cutting federal review times and giving agencies more flexibility will help get more construction projects started.”
Construction Starts
Total construction starts increased 4% in October to a seasonally adjusted annual rate of $1.2 trillion, according to Dodge Construction Network. Nonresidential building starts grew 14%, nonbuilding starts moved 2% higher, while residential building starts fell 3%. On a year-to-date basis through October, total construction starts were up 3% from the first 10 months of 2023. Residential starts were up 7%, nonresidential buildings rose 1%, and nonbuilding starts were up by less than 1%.
Highway and bridge starts were up for the month.
For the 12 months ending October 2024, total construction starts were up 1% from the 12 months ending October 2023. Residential starts were up 6% and nonresidential and nonbuilding starts were each down 1%.
Nonbuilding construction rose 2% in October to a seasonally adjusted annual rate of $314 billion. Miscellaneous nonbuilding starts jumped 38% during the month, while highway and bridge starts moved 7% higher, environmental public works starts fell 6%, and utility/gas plants lost 25%.
On a year-to-date basis through October total nonbuilding starts were flat when compared to a year ago. Miscellaneous nonbuilding starts were up 19%, environmental public works starts were 9% higher, and highway and bridge starts improved by 5%, but utility/gas starts were down 21% through October.
For the 12 months ending October 2024, total nonbuilding starts were 1% lower than the 12 months ending October 2023. Miscellaneous nonbuilding starts were 19% higher, environmental public works gained 6%, highway and bridge starts increased by 5%, but utility/gas starts were down 22%.
Nonresidential building starts climbed 14% in October to a seasonally adjusted annual rate of $466 million. Manufacturing starts rose 114% during the month due to the start of several large projects. Institutional starts rose 13% due to higher levels of activity for education and transportation.
Commercial starts fell 3% despite gains in hotel and parking starts. On a year-to-date basis through October, total nonresidential starts were up 1%. Institutional starts were 16% higher, while commercial starts were down 1%, and manufacturing starts were 33% lower on a year-to-date basis through October.
For the 12 months ending October 2024, nonresidential building starts were down 1% when compared to the previous 12 months. Manufacturing starts were down 37%, commercial starts were down 4%, and institutional starts were 17% higher for the 12 months ending October 2024.
Residential building starts fell 3% in October to a seasonally adjusted annual rate of $373 billion. Single-family starts lost 4%, while multifamily starts were down 2%. On a year-to-date basis through 10 months, total residential starts were 7% higher. Single-family starts jumped 17%, and multifamily starts were down 9% on a year-to-date basis.
For the 12 months ending October 2024, residential starts were 6% higher than the previous 12 months. Single-family starts were 17% higher, while multifamily starts were 11% lower on a 12-month rolling sum basis.
Regionally, total construction starts in October rose in the Northeast, Midwest and South Atlantic, but fell in the West and South Central regions.