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The Portland Cement Association predicts that inflation will take a big bite out of construction growth next year.

"The hurricanes this year helped to ratchet up inflation and that is going to stick around," says Ed Sullivan, PCA’s chief economist. "Economic conditions are just not as favorable as they were before. There is the potential for weaker construction markets, not so much in 2006, but 2007 and 2008 could be a different story."

For next year, Skokie, Ill.-based PCA expects construction growth to slow to 1.8% after inflation takes its cut. This would be down from this year’s estimated 3.9% increase. The PCA forecast was released before the full impact of Hurricane’s Katrina and Rita could be assessed.

"If anything, I would tone the forecast down a little bit," Sullivan says. "Both the residential and nonresidential markets should be softer than we were expecting just last summer."