New orders and inventories for the US materials handling sector fell in September while shipments and overall business activity increased for the month, the Material Handling Industry Business Activity Index (MHI BAI) reveals.

The index is produced by Prestige Economics for US industry body MHI, using responses from approximately 30 leading executives in the materials handling industry who sit on the MHI Board of Governors and Roundtable Advisory Committee. It was published in Forbes Magazine on September 30.

The business activity index for September 2024 sits at 63, up from a steady 50 in August. An index above 50 indicates an increase while below 50 represents a decrease.

Report author and Prestige Economics president Jason Schenker said in Forbes Magazine the data reflects “mixed supply chain dynamics”.

“In September, 42% of respondents reported monthly expansions and 58% reported monthly contractions,” he continues. “More importantly, new orders have been weak recently, expanding in just 12 of the past 27 months. 

“Unfilled orders have also been weak recently, falling to a new record low in September after expanding only seven times in the past 27 months. Inventories have also been weak, expanding just twice in the past 22 months.

“Despite frequent contractions in new orders, unfilled orders, and inventories, shipments have expanded in 30 of the past 36 months. In September, 54% of respondents noted monthly expansions, while 46% reported monthly contractions.”

Schenker says the data “should be watched closely” because of what it may represent for the wider economy.

“After all, weakness in material handling could imply that aggregate economic demand is slowing,” he continues in his piece for Forbes. “Despite slowing new orders, shipments and future new orders have been solid. However, if those series were to weaken, it would be a bigger cause for concern.”

MHI BAI future new orders were at a record high of 100% in September, indicating all respondents expect new orders to be higher in the next 12 months.

“The September three-month average for the future new orders series accelerated to 93%, while the six-month average was unchanged at 91%,” Schenker says. “Both of those averages are exceptionally high.”

He adds that high future new orders and shipments, show “critical positive dynamics in play” for the materials handling sector, despite weakness in some areas.