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MHI Predicts Modest Slowdown in Material Handling Equipment Manufacturing in 2016

By George Prest, CEO, MHI

MHI ForecastAfter experiencing near historic highs in 2015 for Material Handling Equipment Manufacturing (MHEM), MHI predicts a modest slowdown in U.S. material handling equipment manufacturing in 2016.

MHEM orders are expected to be $31.1 billion in 2015, but fall in 2016 by 11.3 percent to 27.6 billion. Domestic Demand is expected to be 30.7 billion in 2015, although it is expected to fall in 2016 by 3.6%.

A strong U.S. equity market, low interest rates and continued manufacturing expansion are supportive of continued domestic new orders. However, a strong dollar and expected increases in interest rates are likely to slow growth.

In light of sluggish global growth and a relatively strong dollar in 2015, domestic material handling firms may face some challenges in coming quarters.  The risk of a broader domestic manufacturing slowdown is high, as is the risk of the slowdown moving to the now-relatively strong service sector.

This means that MHEM domestic demand is likely to fall modestly in 2016, although new orders could fall more dramatically due to soft exports and an overall slowdown in U.S. manufacturing.

Overseas, the outlook for material handling is likely to improve modestly on the back of stimulative monetary policies, although the strong dollar could prevent a significant increase in U.S. exports that would otherwise capture rising sales in that market.

The most important economic data with forward-looking implications for material handling are the ISM Manufacturing Index, the ISM Non-Manufacturing Index and the new MHI Business Activity Index (BAI). The MHI BAI captures changes in material handling business dynamics on a monthly basis including capacity utilization, new orders, shipments, unfilled orders, inventories, exports and future new orders.

In light of changing market dynamics, these data releases remain critical for gauging the near-term outlook for the U.S. economy and material handling. The ISM Manufacturing Index and the MHI BAI are released at the beginning of each month.

At the same time that the outlook for the U.S. economy has softened in recent months, the outlook for the global economy has remained modestly positive in light of accommodative monetary policy stimulus being implemented in the Eurozone and China.

In 2016, we expect improving Eurozone growth as well as some modest improvements in Chinese manufacturing activity.

Trade Events are Positive Indicators

MODEX 2016 will be presented in Atlanta from April 4-7 at the Georgia World Congress Center. This expo has seen positive growth and will showcase an expanded show floor of 250,000 square feet and 850 exhibitors.

We are also seeing great interest in our exhibit space selection for ProMat in 2017. Such activity signals not only confidence in our industry, but also the value MHI brings to our members and the end user community.

You can learn more about MHI and our programming at MHI.org.