Equipment orders continue to grow at a slower pace

By Daryl Delano, Delano Data Insights -- Modern Materials Handling, 1/1/2001

The materials handling industry continued to grow into the fall of last year. However, like most sectors of the U.S. economy, the industry has lost some of the oomph that it had exhibited over the past couple of years.

For instance, the Modern Materials Handling orders index for the third quarter of 2000 was a solid 3.9% above its reading for the same quarter a year earlier. However, the index actually declined 8% between the second and third quarters of 2000. Viewed in proper perspective, the numbers show an industry that remains much healthier than certain numbers might suggest.

Some of those mixed signals are due to the special nature of business activity numbers reported by associations like the Industrial Truck Assoc. (ITA) and the Conveyor Equipment Manufacturers Assoc. (CEMA). They are subject to seasonal influences and the presence or absence of one or two killer orders. As a result, it's always better to look at the trends over the past year or so.

Look at the current index level (not the most recent quarterly change). Although the growth trend has eased in recent months, the absolute volume of new orders has continued to expand. Through the first 10 mo of 2000, the composite index of orders was running 6.9% ahead of its average for 1999, and 19.3% above the 1998 average level.

September 2000 industrial truck orders were 5.6% greater than during the same month a year earlier, although orders during 3 of the previous 5 mo had fallen short of their year-earlier counterparts. And for the third-quarter of 2000 as a whole, total lift truck orders were 4.1% lower than during the July-September period of 1999. Nevertheless, through the first 10 mo of 2000, the ITA order index was running a cumulative 11.5% ahead of the 1999 pace.

Elsewhere, unit handling conveyor orders soared 20.1% between the second and third quarters of 2000, after plunging by 19.7% the quarter before. This brought the July-September 2000 orders level to a point 66.3% above the orders total for the third-quarter of 1999–but marginally below the total for the first 3 months of 2000.

The all-inclusive conveyor orders index rose a more moderate 5.6% between the second and third quarters of last year. But despite often dramatic month-to-month swings in the CEMA numbers, the underlying trend in conveyor orders was unambiguously positive as we entered the final months of 2000.