Material Handling Hits Its Peak

June 8, 2007
Though new orders are at a record high, the market prognosis is for a slowdown.

New orders for material handling equipment for the first quarter of 2007 grew 7.9% over 2006 and set a new record high at $7.6 billion, according to the Material Handling Industry of America (MHIA). Shipments also set a new record at $6.9 billion, representing growth of 8.6%.

MHIA says 2007's first quarter represents the volume peak for the current expansion cycle. We are now beginning to see major business sectors shifting into the 'decelerating growth' phase indicating that this cycle is maturing. Various sectors will vacillate between the accelerating and decelerating growth phase over the next few quarters," says MHIA's F. Hal Vandiver, executive vice president, business development.

Unfilled orders were 14% higher than the first quarter of 2006, finishing at $9.7 billion, which represents the equivalent of 4.2 months of shipments. Imports decreased 4.8%, while exports grew 19.9%.

MHIA says total U.S. consumption for the first quarter of 2007 finished at $7.1 billion, growing 4.4% over 2006.

The tally for 2006 shows new orders grew 10.3% over 2005, setting a new record high of $26.7 billion. Shipments grew 13.7% in 2006. MHIA says unfilled orders grew 26.1% in 2006 versus 2005 to finish at $8.6 billion, representing the equivalent of 4.2 months.

Imports increased 12% in 2006 (over 2005), while exports grew 20.5% during the same time. MHIA says the net trade value (imports minus exports) was $1.4 billion, representing a 5.8% decline in the trade gap from 2005 to 2006. Total U.S. consumption for 2006 finished at $27 billion, growing 12.5% over 2005.

What's ahead? Material handling equipment manufacturing will remain in the growth phases through 2007 and into 2008 on a year-over-year basis. MHIA's forecast: Consumption will grow about 6.5% to 9.5% in 2007, followed by modest to no growth in 2008.

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