News story

US market tipped to fall further

Thursday, 16 January 2020 ( #957 ) - Vernon Hills, IL, United States
George Prest CEO of MHI
George Prest CEO of MHI
The US materials handling industry can expect some pain in the year ahead before conditions improve.

Writing in the latest MHEDA Journal, MHI CEO George Prest notes that manufacturers enjoyed solid growth in 2018 that carried over into the start of 2019. However, as the tax cut bounce faded and trade war fears escalated, the market weakened.

Prest warns that "the prospects for a highly charged political environment in the run-up to the US presidential election along with potential impeachment, persisting trade war threats and a China manufacturing recession could add more risk, uncertainty and negatively impact business investment decisions".

MHI's predictions for 2020 include an expectation that new orders will have fallen modestly in 2019 to USD33.7 billion, drop further to USD33.3 billion in 2020 and rebound to USD35.4 billion in 2021.

The industry group is expecting shipments to have been worth USD34 billion in 2019, falling in 2020 to $33.1 billion and rising to $35.0 billion in 2021.

Domestic demand is expected to have risen to a new record in 2019 of USD38.7 billion, but will fall to USD36.9 billion in 2020 before rising to $39.1 billion in 2021.

Prest advises that the increased levels of volatility justify keeping a close eye on global purchasing manager index (PMI) data as well as the MHI Business Activity Index (BAI). "These are important reports with forward-looking implications for the US and global economies - as well as for materials handling and supply chain," he notes.

And to put it all into perspective, Prest points out that while the outlook for 2020 remains one of continued weakness and volatility, "we must take into account that 2018 and 2019 were record years for this industry and any pullback in 2020 could keep MHEM (materials handling equipment manufacturing) activity still near very high levels".
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