Materials handling orders to slip in 1998 after 14% gain in 1997
Here are three other measures of how the economy is doing.Materials handling index, now tempered by a slowdown in capital spending, will rise 9% next year.;Materials handling index, now tempered by a slowdown in capital spending will rise 9% next year.
By Daryl Delano -- Modern Materials Handling, 4/1/1998
Following exceptional double-digit gains during the first half of 1997, the exclusive Modern Materials Handling magazine index of orders fell by a sharp 12.8% during the fourth quarter of 1997. This followed a 7.7% drop during the previous three-month period.Based on these indications, we must conclude that 1998 will not be quite as good a year as 1997 was for materials handling manufacturers and distributors. It is important to remember, however, that in 1997 the overall orders index grew by 14.3%, the strongest year for the index since 1994.
Business investment in new plant and equipment (which has been the driving force behind this long period of economic expansion) contracted during the final three months of last year.
While it had been widely anticipated that capital spending would cool from the exceptional growth rates registered during the second and third quarters of last year, the absolute decline in spending during the final months of 1997 came as a shock.
The crisis in Asian currency and financial markets undoubtedly played a role in this slowdown, as many American firms have adopted a "wait-and-see" attitude about the implications of the crisis for their businesses. Fourth-quarter orders numbers for both conveyors and industrial trucks suggest that we are beginning to see signs of this capital spending slowdown.
Total October-December 1997 orders for industrial trucks were 27% above the total for the final quarter of 1996. However this sector was showing unmistakable signs that momentum was slowing as 1997 came to a close.
Fourth-quarter 1997 orders for unit handling conveyors were down a sharp 9.3% from the previous three months- particularly disconcerting because the loss came on the heels of a 25.8% drop in the prior quarter. October-December orders last year were 5.3% below the total for the same period in 1996.
As indicated before, we expect to see all sectors of the materials handling market gradually cool over the course of this year. It is clear that the stellar rate of growth in business investment simply could not be sustained indefinitely. However, our preliminary forecasts call for a much better 1999: we believe that the MMH orders index will rise by approximately 9% next year, as U.S. business investment picks up again and export opportunities begin to improve.
There are no other articles related to this article.Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
