Materials handling equipment orders up nearly 10% in first quarter

By by DARYL DELANO, Delano Data Insights -- Modern Materials Handling, 7/1/2000

For materials handling equipment orders, the first quarter was strong but there are indications its legs may be getting just a bit tired.

The exclusive Modern Materials Handling magazine index of orders increased by an estimated 9.6% between the fourth quarter of 1999 and the first quarter of 2000. Compared to the January-March period in 1999, the first quarter of 2000 was 18.8% higher. The growth seen in this year's first quarter was actually sub par for the typical January-March period over the past 10 years.

On a cumulative basis, the MMH orders index for the four quarters ending in March 2000 averaged 16.2% greater than during the previous 12 mo period ending in March 1999. In fact, the rise in the orders index through March 2000 recovers all of 1998's loss of about 8%, and continues to build upon the 11.6% gain recorded during 1999. However, the advance represents the smallest over-the-year gain recorded in the index since July 1999. In other words, there's evidence that the industry's growth momentum is starting to lose some steam.

It's worth noting that orders in the two most important industries that make up our comprehensive materials handling industry index-industrial trucks and conveyors-continued quite positive for the early months of 2000.

First quarter 2000 industrial truck orders were a solid 12.6% higher than in the final quarter of 1999, and 35.8% above their level a year earlier. Lift truck orders had fallen by 4.0% between the fourth quarter of 1998 and first three months of last year. As a result, this year's first quarter gain would appear to be more the result of strong underlying demand than normal seasonal influences. Final figures for full-year 1999 put industrial truck orders 6.5% above their total for all of 1998-much better than the marginal 0.8% gain registered between 1997 and 1998.

Through four months of 2000, the Industrial Truck Association's order index is running a cumulative 21.4% ahead of the 1999 pace. There needs to be a cautionary note about reading too much bullishness into the future, though. The April 2000 new order index was 12.1% lower than in April 1999. This was the first time in 11 mos that a given month's lift truck order measure had fallen below its comparable measure of a year earlier.

Elsewhere, unit handling conveyor orders advanced a strong 33.2% between the fourth quarter of last year and the first three months of 2000. January-March 2000 orders for new unit handling equipment were 29.1% above the level of the same quarter of 1999, and March orders alone were 48.7% greater than during March 1999. Between the fourth quarter of 1998 and the first quarter of 1999, orders for unit handling conveyors advanced an exceptional 56.3%, so the undeniably strong 33.2% gain of this year's first quarter needs to be viewed in perspective.