Materials handling equipment orders rebound from recent decline
The Modern Materials Handling index continues to surge, closely mirroring the country's strong business investment figures.
By Daryl Delano -- Modern Materials Handling, 7/1/1998
The exclusive Modern Materials Handling index of orders rose by a strong 14.4% between the fourth quarter of 1997 and the first quarter of this year. The gain closely mirrored the surge in business investment.Business investment in new plant and equipment, which has been the major force behind the country's long period of economic expansion, grew at an even more rapid 28.8% annual pace after having contracted slightly during the final quarter of last year.
Orders for unit handling conveyors during the first quarter of 1998 were 20.1% above the fourth quarter 1997 level. This was a welcome turnaround from the nearly 10% decline in orders registered over the final three months of last year.
Industrial truck orders were up 12.7% between the final quarter of last year and the first quarter of 1998. Total January-March 1998 orders were 13.7% above the total for the first quarter of 1997. While good, this increase represented the smallest over-the-year gain in quarterly industrial truck orders in about a year. For the three months ending April of this year, industrial truck orders are running just 4.3% ahead of the pace of a year ago.
The first quarter of this year was a good one for materials handling equipment orders, and for overall business investment in new equipment throughout the U.S. economy. The signs in the materials handling industry, however, do indicate that cautious optimism is in order.
Consequently we have made only small upward adjustments in our forecasts of 1998 orders for conveyors, industrial trucks, and materials handling equipment overall. We continue to anticipate that the market will cool, albeit fairly gradually, over the course of this year.
There is a preponderance of evidence that export markets have weakened dramatically. Because of this, we are now calling for the MMH index of orders to ease just marginally this year, specifically, by 1.2%.
Our forecasts still look for a moderately better 1999, as U.S. business investment growth is sustained at a solid level, and export opportunities begin to improve. For the materials handling industry as a whole, we see orders growing by 8.6% next year, with orders for both conveyors and industrial trucks showing significant improvement over the essentially flat 1998 totals.
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