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MHEM releases forecast of significant 2017 downturn

The MHEM quarterly material handling equipment manufacturing forecast for October 2016 was released with a forecast of a significant decline in new orders expected in 2017.  

MHEM reported U.S. material handling new orders for 2015 at a record high of $33.7 billion, with domestic demand also at a record level of $33.5 billion. The report went on to say that material handling growth has slowed significantly in 2016, but some improvements are expected for the year as a whole. For 2017, they reported seeing significant downside risks, but subsequent improvements in 2018 and 2019.

Downside risks include the recent slowing in domestic manufacturing, the slowdown in oil & gas, the relatively strong dollar, slowing global growth, Brexit, and volatility in U.S. equity markets. A modest increase by 2.6 percent is expected in new orders in 2016, but a decline of 13.9 percent is expected in 2017. As has been their view since the end of 2014, Material handling and the entire U.S. economy could be in for a downturn between now and the end of 2017.

Since the July 2016 MHEM forecast report, MHEM new orders data have been choppy. Unfortunately, although 2016 material handling data have been better than expected, leading indicators for material handling still do not look very positive, and the slowdown that has been forecasted for 2017 remains in place for new orders, shipments and domestic demand. Although weakness is expected in 2017, MHEM forecasts for 2018 and 2019 indicate those are likely to be years of improvement for the material handling industry.